OPNAVINST 4860.7C.PDF

OPNAVINST 4860.7C

COMMERCIAL ACTIVITIES (CA)PROGRAM MANUAL

CHIEF OF NAVAL OPERATIONS

DEPUTY CHIEF OF NAVAL OPERATIONS (LOGISTICS)

7 JUNE 1999

OPNAVINST 4860.7C7 June 1999

i

NAVY COMMERCIAL ACTIVITIES (CA) PROGRAM MANUAL

Table of Contents

Page

Part I—Policy Implementation ......................................................................................1

Chapter 1—General Provisions ...................................................................................1A. General .................................................................................................................1B. Inherently Governmental Activities .....................................................................10C. Government Performance of Commercial Activities. .........................................11

1. National Defense or Intelligence Security. ......................................................112. Patient Care. ...................................................................................................113. Core Capability. ..............................................................................................114. Research and Development............................................................................125. No Satisfactory Commercial Source ...............................................................126. Functions with 10 or Fewer FTEs ...................................................................127. Meet Performance Standard...........................................................................128. Lower Cost......................................................................................................129. Temporary Authorization for In-House Performance.......................................13

D. Contract Performance of Commercial Activities .................................................131. Contracted Activities. ......................................................................................132. New Requirements. ........................................................................................133. Severable Expansions ....................................................................................134. Interservice Support Agreements (ISSA) ........................................................135. Activities With 10 or Fewer Civilian FTE .........................................................136. Activities with 11 or More FTE ........................................................................147. Activities Performed by the Military. ................................................................148. Preferential Procurement Programs................................................................149. Lower Cost......................................................................................................15

E. Agency Cost Comparison Waivers .....................................................................15F. Inventory. ............................................................................................................15G. Review of Documents.........................................................................................15

1. Access to Supporting Documents ...................................................................152. Appeals of Agency Decisions .........................................................................16

H. Personnel Considerations...................................................................................16I. Relationship to the Budget ...................................................................................19


ii

Page

Chapter 2—Interservice Support Agreements (ISSA)................................................19A. General ...........................................................................................................19B. Specific............................................................................................................19

Chapter 3—Cost Comparisons ..................................................................................21A. General ...............................................................................................................21B. The CA Study Team ...........................................................................................22C. Performance Work Statements...........................................................................23D. Quality Assurance Surveillance Plans. ...............................................................24E. Management Plans.............................................................................................24F. Safeguarding the MEO........................................................................................26G. Solicitations ........................................................................................................26H. Methods of Procurement ....................................................................................26I. The Independent Review .....................................................................................27J. Evaluation of Bids and Tentative Decisions.........................................................28K. Appeals of Tentative Waiver and Cost Comparison Decisions ...........................29L. Post-MEO Performance Review .........................................................................31

Part II—Preparing the Cost Comparison Estimates ...................................................1

Chapter 1—Implementation Instructions......................................................................1A. General. ................................................................................................................1B. Organization .........................................................................................................1

Chapter 2—Developing the Cost of Government Performance ...................................1A. General .................................................................................................................1

1. Overview...........................................................................................................12. Standard Cost Factors ......................................................................................13. Common Costs .................................................................................................14. Retained and Save Pay ....................................................................................15. Cost of Conducting a Cost Comparison............................................................16. Proration of Performance Periods.....................................................................17. In-House Costs .................................................................................................18. Minimum Cost Differentials ...............................................................................19. Rounding Rule ..................................................................................................210. Inflation ...........................................................................................................211. Other ISSA Adjustments .................................................................................2

B. Personnel (Line 1) ................................................................................................2C. Material and Supply (Line 2).................................................................................3D. Other Specifically Attributable (Line 3) .................................................................3

1. Overview...........................................................................................................3


iii

Page2. Depreciation......................................................................................................33. Cost of Capital. .................................................................................................34. Rent ..................................................................................................................45. Maintenance and Repair...................................................................................46. Utilities ..............................................................................................................47. Insurance ..........................................................................................................48. Travel................................................................................................................49. MEO Subcontract Costs. ..................................................................................410. Other Costs.....................................................................................................4

E. Overhead (Line 4).................................................................................................4F. Additional (Line 5) .................................................................................................5G. Total Cost—In-House Performance (Line 6) ........................................................5

Chapter 3—Developing the Cost of Contract Performance..........................................5A. General. ................................................................................................................5B. Contract Price (Line 7)..........................................................................................5

1. Overview...........................................................................................................52. Contract Types .................................................................................................53. Tax Exempt Organizations................................................................................54. Procurement Preference Eligible Organizations ...............................................5

C. Contract Administration (Line 8) ...........................................................................5D. Additional (Line 9).................................................................................................6E. One-Time Conversion (Line 10)............................................................................6

1. Overview...........................................................................................................62. Material Related Cost........................................................................................63. Labor Related Costs..........................................................................................64. Other Costs.......................................................................................................85. One-Time Cost Computation ............................................................................8

F. Gain from the Disposal/Transfer of Assets (Line 11). ...........................................8G. Federal Income Tax (Line 12) ..............................................................................8H. Total Cost—Contract Performance (Line 13)........................................................8

Chapter 4—Calculating the Cost Comparison Decision...............................................8A. Conversion Differential (Line 14) ..........................................................................8B. Adjusted Total In-house Cost (Line 15) ................................................................8C. Adjusted Total Contract Cost (Line 16).................................................................8D. The Cost Comparison Decision (Lines 17/18) ......................................................9

Chapter 5—Streamlined Cost Comparisons for Activities with 65 FTE or Less ...........9A. General .................................................................................................................9B. Procedure. ............................................................................................................9


iv

Appendices

Appendix A -- Definition of Terms and Acronyms

Appendix B – Mandatory/Advisory Publications and Internet Resources

Appendix C -- Reporting Requirements

Appendix D -- Public Affairs Guidance

Appendix E -- Principal Statutes Governing CA

Appendix F -- Brief Summary of the A-76 Decision Process

Appendix G -- The CA Function Nomination Examples

Appendix H--Ethics Issues Related to Participation in OMB Circular A-76 Cost Comparison Studies and Exercise of Right of First Refusal of Employment

Appendix I--Management Decision Procedure to Convert Activities Not Subject to OMB Circular A-76 to Contract

Appendix J -- Codes and Definitions of Functional Areas

Appendix K -- Compelling Reason Codes


v

List of Effective Pages

i – K1 Original


vi

Record of Changes

CHANGE # DATE DATE ENTERED


vii

Introduction

This Instruction implements

• Office of Management and Budget (OMB) Circular A-76, Performance ofCommercial Activities, 1983 and its Revised Supplemental Handbook, 1996(NOTAL)

• Department of Defense (DoD) Directive 4100.15, Commercial ActivitiesProgram, 10 Mar 1989 (NOTAL)

• The DoD Instruction (DODI) 4100.33, Commercial Activities ProgramProcedures, 9 Sep 1985 (NOTAL)

This Instruction

• Establishes policy for managing and implementing the Navy CommercialActivities (CA) program.

• The Navy’s Commercial Activity (CA) Program is a component of the Navy'sStrategic Sourcing program. The reinvention of government must consider awide range of options, including: the consolidation, restructuring orreengineering of activities, privatization options, make or buy decisions, theadoption of better business management practices and the termination ofservices or programs. In the context of this reinvention effort, the A-76 effortis focused on the conversion of commercial activities. The Navy is pursuingthe reinvention of its infrastructure by the implementation of StrategicSourcing. The key step in Strategic Sourcing is the proper definition of afunction to optimize the use of tools to maintain or improve the level ofperformance or service, at a reduced cost. The A-76 process is one of thetools that may be utilized by an organization to obtain greater efficiency at areduced cost.

• Follows, generally, the outline of the OMB Circular A-76, RevisedSupplemental Handbook, 1996 and must be read in conjunction with same.As such, section/paragraph titles in this instruction correspond to those in theCircular. Readers will note that certain sections in this document contain briefdiscussions and summaries while other sections are absent of any text. Thisis intentional so as not to repeat what is contained in the OMB Circular.

• Provides guidance and procedures for determining whether recurringcommercial activities will be performed as in-house operations using Navy


viii

facilities and personnel, or under contracts or agreements with commercialsources, state and local governments, and Federal agencies outside the DoD.

Commanders at all levels will continuously review their CA functions using theCommercial Activities inventory as a tool to identify competition opportunities.Commanders have authorization to nominate their activities as candidates for costcomparison.

If information contained herein conflicts with the law, or procedures contained in theOMB and DoD documents listed above, the law and/or OMB and DoD documents willhave precedence over this instruction.


I-1

Part I—Policy Implementation

Chapter 1—General Provisions

A. General

1. This instruction does not apply during times of war or military mobilization,does not provide authority to enter into contracts, and applies to printing and bindingonly in Navy activities that are exempt by law from the provisions of Title 44 U.S. Code(U.S.C.), Public Printing and Documents. The Navy will depend on both Governmentand commercial sources to provide needed products and services with the objective ofmaintaining military readiness. It is Navy CA policy that activities will:

a. Perform CA services at their required quality and quantity of work at thelowest possible cost.

b. Perform cost comparisons according to OMB Circular A-76 and itsRevised Supplemental Handbook (NOTAL):

(1) Before converting a CA from in-house operation to contractperformance or from contract to in-house performance.

(2) Before starting or expanding any in-house CA.

(3) Before converting a CA to or from performance by an InterserviceSupport Agreement (ISSA) provider.

(4) Before converting a CA to or from performance by a State or localgovernment agency except for emergency circumstances such as disaster relief.

c. Initially, obtain claimant approval before converting any activity to orfrom contract, in-house operation, or ISSA performance.

d. Complete cost comparison studies in the shortest possible time.

e. Not modify, reorganize, divide, or in any way change anycommercial activity to circumvent the requirements of this instruction.

2. Implementation. The proponent of this instruction is the Deputy Chief ofNaval Operations for Logistics. The proponent has the authority to approve exceptionsto this instruction that are consistent with controlling laws and regulations.


I-2

3. Scope of Application

This instruction applies to all U.S. Navy and Navy Reserve organizationsthat perform commercial activities. This instruction does not apply to:

(a) Products and services available from other Federal agencies(mandatory sources) required by law to furnish them including sources required by theFederal Acquisition Regulation (FAR) Part 8 (e.g., Federal Prison Industries, NationalIndustries for the Severely Handicapped, and National Industries for the Blind.).

(b) Products or services procured following treaties or internationalagreements or where the acquisition of products and services are inconsistent with law.

(c) Expert or consulting services of a purely advisory nature related tofunctions such as Navy command, administration, and management including programmanagement and control.

(d) Nonappropriated Fund Instrumentalities (NAFI) staffed solely withcivilian personnel paid by Nonappropriated Funds (NAF). Procedures contained in thisinstruction are mandatory for NAFI CAs when partially staffed with civilian personnelpaid by appropriated funds (APF). The NAFI activities funded solely with NAF may beincluded in CA cost comparisons involving related functions.

(e) Products or services provided by personnel or equipment assignedto combat units afloat or ashore.

(f) The management and conservation of natural and cultural resourcesunder DoD control, including planning, implementation, and enforcement functions.

(g) Products and services exempt from OMB Circular A-76.

4. Responsibilities

a. Secretary of the Navy (SECNAV) (Note. The following does notconstitute Chief of Naval Operations (CNO) assignment of responsibilities to theSECNAV, however the CNO will consult with SECNAV organizations on issuesconcerning the following.):

(1) Deputy Under Secretary of the Navy. The Deputy Under Secretaryof the Navy (DUSN) represents the Department of the Navy (DON) on CompetitiveSourcing issues with Congress, the Office of the Secretary of Defense (OSD), other


I-3

Services, other Federal agencies, and the Office of Management and Budget (OMB).The DUSN provides broad oversight for DON Competitive Sourcing policies andexceptions to policy.

(2) Assistant Secretary of the Navy (Research, Development &Acquisition) (ASN(RD&A)). The ASN(RD&A) has overall responsibility for, and providesacquisition management expertise and oversight on, all aspects of acquisition includingacquisition planning, source selection, contract administration, and quality assurance tosupport Navy CA Program implementation. The ASN(RD&A) provides broad oversightfor CA program policies.

(3) Assistant Secretary of the Navy (Installations and Environment)(ASN(I&E)). The ASN (I&E) provides policy oversight on CA issues.

(4) Assistant Secretary of the Navy (Financial Management &Comptroller) ASN(FM&C)). The ASN(FM&C) provides financial management and costestimating expertise and represents the Navy on program issues before thecongressional appropriations committees. The ASN(FM&C) verifies integration of allCA actions into the budget phase of the Navy Planning, Programming, and BudgetingSystem (PPBS).

(5) Assistant Secretary of the Navy (Manpower & Reserve Affairs)(ASN(M&RA)). The ASN(M&RA) provides military and civilian personnel andmanpower management expertise.

(6) General Counsel of the Navy/Office of the General Counsel (OGC).The OGC, through the Office of the General Counsel (Research, Development &Acquisition), reviews proposed guidance on Navy CA policies and procedures andadvises the Navy Staff on all matters related to the CA program. The OGC, through itsfield offices, provides CA legal advice on matters related to the CA program. The OGC,through its field offices, provides CA legal support to all Navy and U.S. Marine Corps(USMC) activities and claimants from initial reviews and announcements of studythrough any protests, legal challenges, and administrative appeals of decisionimplementation.

(7) Naval Audit Service (NAVAUDSVC)/The Auditor General:

(a) Develops, coordinates, and publishes guidance for performingIndependent Reviews of CA cost comparisons.


I-4

(b) Serves as the Independent Review Officer (IRO) of CA costcomparisons involving 41 or more civilian Full-Time Equivalent (FTE) positions.

(c) Monitors and provides feedback to CNO (N4) and theStrategic Sourcing Office (SSO) on work performed by private consultants conductingIndependent Reviews.

(8) Chief of Legislative Affairs (CLA). The CLA:

(a) Represents the Navy on CA program issues before theCongress.

(b) Monitors the development and passage of legislation affectingthe Navy CA Program and notifies CNO (N4) about pertinent legislation.

(c) Notifies Congress of the Navy's intent to conduct costcomparison studies, informs Congress of cost comparison studies' progress as requiredby statute, notifies Congress of cost comparison studies' results, and conducts liaisonwith Congress regarding cost comparison studies.

(9) Navy Office of Information. The Chief Information Officer representsthe Navy on CA Program issues before the news media and the public.

b. Chief of Naval Operations:

(1) The Deputy Chief of Naval Operations (Logistics) (N4) will:

(a) Act as the Navy’s CA Program Manager and, as such, will act forthe Office of the CNO (OPNAV) for CA matters.

(b) Publish guidance on Navy CA policies and procedures.

(c) Prepare congressional announcements of intention to performcost comparisons and appropriate congressional notification of intention to awardcontracts. These include:

1. Approving all conversions of CAs involving more than 10civilian positions prior to contract award.

2. Notifying commands of functions to undergo costcomparison.


I-5

(d) Monitor the overall progress of the CA program, and maintainthe status of the Navy's CA inventory and cost comparison efforts including the reviewand approval of schedules for CA cost comparisons.

(e) Designate the lead claimant responsibility for CA studies whichcross claimant organization lines and directs appropriate liaison between theseclaimants.

(f) Recommend to SECNAV the in-house retention of certain CAsto support National Defense.

(g) Approve the results of all CA inventories including assignmentof Compelling Reason Codes.

(h) Monitor appeal officers' decisions for consistency.

(i) Direct Post-Most Efficient Organization (MEO) PerformanceReviews.

(j) Coordinate with the Strategic Sourcing Office(SSO) for competitive sourcing and privatization initiatives generated by the CNO,claimants, and field activities.

(2) The Surgeon General of the Navy determines, on an individualbasis, whether the performance of CAs in Navy hospitals by Navy personnel is in thebest interest of direct patient care.

(3) The Deputy Chief of Naval Operations (Manpower & Personnel) (N1) will:

(a) Periodically update manpower data tools to assist claimants inthe identification of candidates for competition that support military manpower andpersonnel requirements.

(b) Evaluate military billets to identify impact on personnel andmanpower considerations (e.g., sea-shore rotation, homebasing opportunity and careerprogression, and other community management issues) and verify each billet hasfunding across the Future Years Defense Program (FYDP).


I-6

(c) Take action to adjust and shape enlisted and officercommunities as programmed billet reductions reflect in the publication of new EnlistedProgrammed Authorizations (EPA) and Officer Programmed Authorizations (OPA).

(d) Coordinate with the appropriate offices within the NavalPersonnel Command.

(e) Coordinate with CNO (N4) to verify CA policies are consistentwith manpower and personnel policies and procedures.

(4) The Director of Naval Training (N7) will, in conjunction with the Chiefof Naval Education and Training, verify Navy training policies and procedures areconsistent with CA program policies. The Director of Naval Training will develop andoffer training courses specifically designed to meet the needs of the Navy’s CAprogram.

(5) The Deputy Chief of Naval Operations (Resources, WarfareRequirements & Assessments) (N8) will:

(a) Provide force structure and skill sustainment expertise and, incoordination with ASN(M&RA) and DCNO(M&P), review uses of anticipated and actualmilitary and civilian manpower savings resulting from CA program implementation.

(b) Review requests for functions recommended for conversion toin-house operation or for transfer to combat units.

(c) Integrate the Navy’s CA program into the PPBS process.

c. The Strategic Sourcing Office. The Strategic Sourcing Office (SSO) is anOPNAV detachment established to facilitate the Strategic Sourcing process. StrategicSourcing refers to the process that the Navy will use to determine how related functionsshould best be organized or eliminated to achieve greater efficiency at reduced cost.The Commercial Activities process is a key component in Strategic Sourcing, thus theSSO will function in a support role, when needed, throughout the entire CA process.The SSO does not supersede normal chain of command authorities. The SSO isresponsible for promoting the most streamlined processes to provide the Navy the bestvalue for all products and services competed. This includes developing/determiningmeasurement requirements and recommending optimal approaches for outsourcingdifferent support services, such as the use of multi-functional versus discrete functionalapproaches and regional versus activity-oriented solicitations.


I-7

d. Major Claimants will directly implement and manage the Navy's CAprogram for all subordinate elements as directed by this instruction, and will:

(1) Verify accomplishment of their activity's CA inventory as plannedand verify products and services are obtained according to the criteria in this instructionand other applicable laws and regulations.

(2) Verify field activities receive adequate oversight during the costcomparison process, including:

(a) Providing technical assistance.

(b) Establishing Plan of Action and Milestones (POA&M) for costcomparisons, in conjunction with activity commanders, and monitoring of POA&Maccomplishment.

(c) Verifying the conduct of Independent Reviews conform to thisinstruction.

(d) Conducting cost comparison reviews at each field activity asappropriate.

(3) Verify that the conduct of administrative appeals conform to thisinstruction.

(4) Prepare and maintain standard Performance Work Statements(PWS) for functions which the claimant has primary responsibility.

(5) Approve or disapprove requests to continue or expand CAsrequiring additional funding, equipment, or military and civilian personnel in cases wherethe required additional resources can be made available from within their claimanciesand where the action does not constitute a new requirement.

(6) Approve requests to use contractor support in developing PWSs orin performing CA management studies or cost comparison analyses.

(7) Approve, for CA functions involving 10 or fewer civilian positions,direct conversion to contract. (Note: The Navy announces these functions to Congressas a courtesy prior to conversion.)

(8) Coordinate all CA actions with CNO (N4) and their activitycommanders.


I-8

(9) Verify their field activity commands meet the reporting requirementsof this instruction.

(10) Collect and enter data required by this instruction into theCommercial Activities Management Information System (CAMIS).

e. Activity Commanders will:

(1) Appoint a CA Program Manager to monitor and coordinate theoperation of their command's CA program.

(2) Verify the CA inventory and review of their command's CA functionsand, in coordination with the chain of command, decide which functions should besubject to cost comparison.

(3) Accomplish all CA actions requiring approval, including newrequirements, expansions, and governmental function determination, according to thisinstruction.

(4) Verify development and completion of their activity's PWS, QualityAssurance Surveillance Plan (QASP), and Management Plan. (Note: Each activity isresponsible for the development of its PWS, QASP, Management Plan, and In HouseCost Estimate (IHCE)). Where provision of in-house services under a host-tenantrelationship exists, the activity providing the services is responsible. The receiver of thesupport services will provide its requirements to the activity provider for inclusion in thePWS.

(5) Verify preparation of cost comparisons for CA conversion.

(6) Obtain CNO (N4) approval before award if solicitation results in adecision to convert to contract.

(7) Provide a sufficient number of qualified personnel to perform qualityassurance.

(8) Provide quality assurance reports to the contracting officer.

(9) Evaluate contractors' request for payment and recommendadjustments as appropriate.


I-9

(10) In conjunction with the contracting officer, develop proposedcontract modifications, including cost estimates, and provide them to the contractingoffice.

(11) Assist the contracting officer, as requested, with negotiation ofcontract modifications.

(12) Fund contractual obligations and identify all un-resourcedpersonnel and funding requirements to the attention of the major claimant.

(13) Certify their activity's MEO.

(14) Begin implementation of the MEO within 30 days of decision toperform in-house and achieve MEO operation, to allow for formal Post-MEOPerformance Review, by the end of the first full year of performance.

(15) Certify, 1 year after MEO implementation, that the in-houseoperation is performing to the levels specified in the PWS and within the In-House CostEstimate (IHCE).

(16) Annually identify to ASN(M&RA) all potential Reductions In Force(RIF) resulting from competitions.

(17) Fulfil any required labor/management bargaining obligationsthrough consultation with appropriate exclusive bargaining representatives.

(18) Collect and report the information required by this instructionregarding cost comparisons to the major claimant.

f. Contracting Offices will participate in the conduct of cost comparisonsand will:

(1) During the pre-award period:

(a) Assist with the preparation of acquisition plans.

(b) Assist activities with writing their PWS and Quality AssuranceSurveillance Plans (QASP), and review all activity-developed PWSs for contractibility.

(c) Perform solicitation actions.


I-10

(2) During the post-award period:

(a) Perform contract administration actions, as necessary.

(b) Process, to approval, all contract documents requiring exerciseof contracting authority.

(c) Negotiate all changes.

(d) Direct remedial contractor action.

(e) Delegate authority to activities for surveillance/inspection ofcontractor's performance.

g. Human Resources Service Centers/Human Resources Offices will:

(1) Answer affected employees' questions regarding benefits, Right ofFirst Refusal, and RIF procedures.

(2) Provide personnel cost data to the CA Team.

(3) Provide necessary services to affected civilian employees.

h. Employees in the activity under study will:

(1) Support activity commanders during the CA study.

(2) Participate, fully, in the development of the PWS and theManagement Plan.

(3) Recommend functional improvements to the CA Team for inclusionin the PWS and Management Plan.

5. Safety. When specific safety procedures apply to a CA, activities will ensurethese requirements are included in the PWS. The QASP will include safety inspections,as appropriate. Activities should consult with cognizant Navy safety and healthprofessionals during preparation of the PWS and QASP to verify and address allpertinent safety and health requirements.

B. Inherently Governmental Activities


I-11

1. Inherently Governmental activities are not subject to OMB Circular A-76 orthis instruction.

2. Activities specifically exempted by statute are not subject to OMB CircularA-76 or this instruction. Presently, these include certain workers performing depot-levelmaintenance (Title 10 2464), firefighters and security guards (Title 10 2465), and certainworkers performing wildlife conservation and rehabilitation (Title 16 670a). Additionalinformation is at the appendix entitled Principal Statutes Governing CA.

C. Government Performance of Commercial Activities.Government performance of a commercial activity is authorized under any of thefollowing conditions:

1. National Defense or Intelligence Security.The basic National Defense considerations are mobilization requirements, trainingrequirements for skills that are exclusively military in nature, military rotation baserequirements, career progression, and specifically exempted core logistics functions.Activities will justify retention of in-house operation for National Defense reasons on acase by case basis. The justification will address the specific function and militarypositions under review and must include a detailed explanation of why commercialsuppliers cannot provide the needed capability. Activities will prepare a summary of theinitial determination to retain functions in-house for reasons of National Defense andforward their request to CNO (N4) via the chain of command for approval. Formobilization or contingency requirements, approval of justification to retain functions in-house will occur when activities performing these functions receive the designation of“deployable” in approved contingency plans.

2. Patient Care.The Navy Surgeon General may authorize performance of CAs at DoD hospitals byNavy employees if performance by Navy personnel is in the best interest of directpatient care. Activities will provide detailed documentation to justify such decisions.

3. Core Capability.This only applies to core logistics functions needed to maintain a logistics capability anda ready and controlled source of technical competence and resources necessary toensure effective and timely response to National Defense contingency, mobilization,and other emergencies. Navy activities may request exemption, based on theserequirements, on a case by case basis from CA cost comparison for National Defensereasons. Logistics functions justified as vital to combat and direct combat supportactivities in times of mobilization, National Defense contingency, and other emergencyrequirements, are candidates for designation as core logistics functions.Title 10 U.S.C. 2464


I-12

4. Research and Development.This instruction does not apply to the conduct of research and development. Researchand development activities may be performed in-house, by contract, or by ISSA withoutcost comparison. Recurring and severable activities that are performed in support ofdirect research and development are subject to the cost comparison requirements ofthis instruction. The operation or support of installations or equipment used forresearch, development, test and evaluation (RDT&E), including maintenance support oflaboratories, operation and maintenance of test ranges, and maintenance of test aircraftand ships, is subject to the CA program. The fact that these support functions arefunded with RDT&E funds does not constitute an adequate basis for their exclusionfrom the CA program.

5. No Satisfactory Commercial Source

6. Functions with 10 or Fewer FTEs

a. Direct Conversion of Commercial Activities. Navy policy provides fordirect conversion of CAs involving 10 or fewer civilian employees to in-house or ISSAperformance after meeting the following conditions:

(1) If the contracting officer determines that the contractor’sperformance is unsatisfactory and that fair and reasonable prices cannot be otherwiseobtained.

(2) If the conversion to Government employee in-house operationsupports cost effectiveness (Activities should make this decision after completion of acost comparison similar to that found in the Navy's Guide for Conducting a 10 andUnder Study.).

7. Meet Performance Standard

8. Lower Cost.Except as otherwise provided by law, the Secretary of Defense shall procure eachsupply or service necessary for or beneficial to the accomplishment of the authorizedfunctions of the DoD from a source in the private sector if such a source can providesuch supply or service to the Department at a cost that is lower than the cost at whichthe Department can provide the same supply or service. Activities will perform a costcomparison according to OMB Circular A-76 to determine lower cost. Title 10 U.S.C.2462


I-13

9. Temporary Authorization for In-House Performance

10. Expansion.An expansion is the modernization, replacement, upgrading, or the enlargement of anin-house commercial activity or capability. If the expansion involves a 30-percentincrease in the operating cost of the activity, a 30-percent increase in the total capitalinvestment to perform the activity or an increase of 65 FTE or more, a cost comparisonis required prior to authorizing in-house performance. A consolidation of two or moreexisting commercial activities is not an expansion, unless the total operating cost is 30percent greater than the total of the individual components or it requires an increase of65 FTE or more. The above definition notwithstanding, pursuant to OMB Circular A-126all aircraft purchase decisions should be justified through formal cost comparison,as provided by the OMB Circular A-76, Revised Supplemental Handbook (NOTAL).

D. Contract Performance of Commercial Activities

1. Contracted Activities.An activity obtained through a competitively awarded contract will continue tobe obtained by contract as long as the quality of service is acceptable and competitiveprices are fair and reasonable. If the Government believes that quality is unacceptableor prices appear unreasonable, a cost comparison is conducted to justify conversion toin-house or ISSA performance.

2. New Requirements.Navy activities will obtain all new commercial activity functional requirements bya competitively awarded contract. Activities will conduct a cost comparison study tojustify in-house or ISSA performance if there is reason to believe that contract serviceprice or quality would be unreasonable.

3. Severable Expansions

4. Interservice Support Agreements (ISSA)

5. Activities With 10 or Fewer Civilian FTE

a. Activities may convert functions to contract without submission of amanagement plan or cost comparison upon meeting the following conditions:

(1) The activity commander must attempt to place all affected civilianemployees in a position at their present installation, or within the local area,commensurate with their current skills and pay grades. If vacancies do not exist, theemployees will receive retraining opportunities for existing or projected vacancies at


I-14

their present installation or within the local area. Activity commanders will ensure allaffected civilian employees are afforded placement opportunities via the PriorityPlacement Program and all affected employees will be afforded "Right of First Refusal"in the contract. A conversion of an activity with 10 or fewer FTE is not subject to appealunder CA administrative appeal procedures. The Navy announces activity directconversions to Congress as a courtesy.

(2) The contracting officer determines that offerors will provide requiredlevels of service at fair and reasonable prices.

6. Activities with 11 or More FTE

a. Functions with 11 to 50 civilian FTEs. In this case, activities will conducta CA study to formulate an MEO and perform a full or streamlined cost comparison.Any decision to convert the function to contract requires congressional notification priorto actual conversion. The Navy announces cost comparison studies of these activitiesto Congress as a courtesy. Fiscal Year (FY) 1999 Defense Appropriations Act Section8014

b. Functions with more than 50 civilian FTEs. In this case, activities willconduct a CA study to formulate a MEO and perform a cost comparison. Any decisionto convert the function to contract requires congressional notification prior to actualconversion. The CNO (N4) announces these functions to Congress as required by lawbefore the study commences. Title 10 U.S.C. 2461

7. Activities Performed by the Military.Upon announcement, the function can be “directly converted” as detailed in OMBCircular A-76. Activities will report cost data in accordance with the ReportingRequirements Appendix. All functions involving military personnel must have securedprior approval from CNO (N12) and (N4) to eliminate military billets. The Navyannounces cost comparison studies of activities performed by the military to Congressas a courtesy.

8. Preferential Procurement Programs.Activity commanders may convert in-house activities of any size to contractperformance without a cost comparison if award of the contract is to a required sourceof supplies and services, as defined in FAR Part 8, Required Sources of Supplies andServices, at a fair market price even when the conversion results in adverse employeeactions. If possible, activity commanders must attempt to place all affected civilianemployees in a position at their present installation, or within the local area,commensurate with their current skills and pay grades. If vacancies do not exist, the


I-15

employees will receive retraining opportunities for existing or projected vacancies attheir present installation or within the local area. Activity commanders will ensure allaffected civilian employees are afforded placement opportunities via the PriorityPlacement Program and attempt to provide all affected employees the "Right of FirstRefusal."

9. Lower Cost

E. Agency Cost Comparison Waivers

F. Inventory.The CNO (N4) separately publishes and issues CA inventory policies and procedures.

G. Review of Documents

1. Access to Supporting Documents

a. Activity commanders or their designated representatives will consult withcivilian employees affected by CA cost comparisons at least monthly during thepreparation of the PWS and the management plan and consider the employees’ viewsin the preparation of these documents. Activity commanders may also consult withemployees on other matters related to the CA cost comparison. If a labor unionrepresents affected employees, consultation with union representatives fulfills the aboverequirement. Management should provide employees with updated milestones/targetdates and the general status of study progress, and should offer the employees anopportunity to review and to comment on the PWS. To preclude allegations of non-compliance with this statutory requirement, management should summarize the resultsof each monthly meeting in a brief memorandum for the record and forward copies toemployees’ representatives and post copies in the work place. Title 10 U.S.C. 2467

b. Since parts of the management plan concerned with the development ofthe MEO must remain confidential until bid opening, employees who are not membersof the CA Team may not review them. Management should encourage all employees tocontribute suggestions concerning ways to increase efficiency of the Government’soperations. In both cases, management must advise employees that their role is purelyconsultative and that final decisions concerning both the PWS and the MEO will restwith management.

c. All supporting CA documentation must be available for examination uponcongressional request. Title 10 U.S.C. 2461


I-16

2. Appeals of Agency Decisions

H. Personnel Considerations

1. Military. Activity commanders will take prompt action to identify and reassignmilitary personnel from activities proposed for CA study:

a. Billet Identification and Approval. When proposing a CA study containingmilitary personnel to CNO (N4), activities will submit complete identification of all militarybillets and their future years' funding information to CNO (N12) for review to determineany adverse impacts position withdrawal may have on rotation and homebasing.Activities will not revise military manpower authorization documents for CA functionsunder review/study without prior OPNAV approval.

b. If activity military billet deletion is denied, activities and claimants mustdecide:

(1) If, in light of the CNO (N12) decision, the function is excluded fromcompetition.

(2) If restructuring the business unit could allow for an organizationwhere the military function continues regardless of any cost comparison decisions.

c. Once billets are approved for cost comparison they will be given anAccounting Category Code (ACC) "E" in the Total Force Manpower ManagementSystem (TFMMS). This action indicates that these billets are not available for otherinitiatives.

d. Conversion and Deletion/Transition. Activities and claimants mustcoordinate billet deletion and obtain new funding for civilian employees under MEO orfor contractor operation.

e. Funding Conversion

(1) Directly Funded Activities. Claimants must coordinate with theappropriate resource sponsor(s) to transfer the funding for military billets from MilitaryPersonnel, Navy (MPN) to Operations and Maintenance, Navy (O&MN). Resourcesponsor(s) will submit issue papers for the next Program Objective Memorandum/Program Review (POM/PR) cycle. Activities will accurately identify funded billets toreceive O&MN compensation. Claimants must also identify the transferred andincreased O&MN account to the resource sponsor. Claimants will receive one half of


I-17

the MPN and one half of the O&MN programming rate for each billet in the first fiscalyear of the program (i.e., in FY 00 for an issue identified in POM 00) and the full O&MNrate thereafter.

(2) Navy Working Capital Fund (NWCF) activities. No fundingconversion occurs for NWCF activities and the resource sponsor will submit POM/PRissues to adjust the military reimbursable end strength.

f. Billet Deletion. After approval of POM/PR issues, claimants mustsubmit automated TFMMS packages to match specific billet reductions to programmedendstrength reductions and identify billet phase-out dates as part of the claimantqualitization process. Completion of qualitization will provide the data necessary forstrength planning and community shaping. This process also signals the distributionsystem to show billet phase-out to detailers. Transition to contract or in-houseperformance requires coordination similar to normal permanent change of station (PCS)moves. At a minimum, the following coordination will take place:

Claimant with Manning Control Authority (MCA)Activity with Placement OfficerIndividual with DetailerPlacement Officer/Detailer with MCA

Activity commanders must develop and coordinate, with the Commander, NavyPersonnel Command (NPC 45), a detailed transition plan that includes alternatives suchas extending individuals, "gapping a billet," realigning personnel resources, establishingtemporary fills with local temporary active duty (TAD), etc.

2. Civilian

a. Careful planning and full involvement of Human Resources ServiceCenter (HRSC)/Human Resources Office (HRO) staffs and other cognizant personnelwill reduce potential adverse impact to civilian personnel during CA studies. Staffs mustassist affected/ displaced employees by:

(1) Answering affected employees' questions regarding benefits, Rightof First Refusal, RIF procedures, and available transition services.

(2) Assisting the CA Team with MEO position classification andTransition Plan (TP) actions.

(3) Reviewing all affected employees’ Official Personnel Folderdocuments to determine employees' qualification for available positions.


I-18

(4) Providing employee services for affected civilian employeesincluding:

(a) Registration in Defense Outplacement Referral Service (DORS)and the Priority Placement Program, and establishing entitlement to separationincentive pay.

(b) Establishing outplacement and employment assistanceservices with state government and local businesses.

(c) Contacting local vocational/technical schools and colleges anduniversities capable of providing retraining opportunities and resume writing classes forall affected personnel.

(d) Coordinating with the Department of Veterans Affairs in behalfof affected former Service veterans who are eligible for GI Bill educational benefits.

(e) The Navy has a responsibility to consider the special needs ofhandicapped employees. Commands will make a concerted effort to assisthandicapped employees and disabled veterans as part of their affirmative action plan.

(5) Providing personnel cost data to the CA Team.

b. Reduction in Force (RIF) Planning

(1) The goal of RIF planning is to reduce, as much as possible, adversepersonnel actions. Activities will make every reasonable effort to place or retrain civilianemployees displaced as a result of a CA cost comparison or direct conversion. Whereno actual or projected vacancies exist, HRSCs and HROs will coordinate withappropriate state employment offices to pursue possibilities for retraining opportunitiesunder the Job Training Partnership Act or similar retraining programs for transition to theprivate sector. A RIF may be unavoidable even after exhausting all reasonableplacement efforts. In this event, HRSCs and HROs will make every effort to helpseparated employees find alternate employment. Title 10 U.S.C. 2468

(2) Activities will annually identify to ASN(M&RA) all potential RIFsresulting from A-76 competitions for that fiscal year and for the first quarter of the nextfiscal year if employees will receive RIF notification resulting from an A-76 competition.This identification of a potential RIF is a "worst case" analysis and in no way intends topre-judge the outcome of any cost comparison. Activities will follow specific RIF


I-19

guidance in the SECNAVINST 12351.5E, Approval and Notification of CivilianReduction-in-Force, Transfer of Function, and Furlough Actions.

c. Commercial Activities Training. Adequate training of personnelresponsible for implementing the CA program significantly improves study conduct andcompletion. The Chief of Naval Education and Training (CNET) offers trainingspecifically tailored to meet the requirements of personnel responsible for implementingthe CA program. Activities will request training courses through their major claimants'CA point of contact.

d. Use of Volunteer, Prisoner, and Temporarily Assigned MilitaryManpower. Activities will exclude volunteer, prisoner, and temporarily assigned militarymanpower from OMB Circular A-76 cost comparisons. Specifically, the PWS will notinclude supervision of, or performance of work by, volunteer, prisoner, or temporarilyassigned military manpower.

I. Relationship to the Budget

Chapter 2—Interservice Support Agreements (ISSA)

A. General

1. An ISSA may offer the opportunity to reduce costs through economies ofscale. Activities will use the cost comparison study procedures established by OMBand this instruction to determine when services should be performed by in-house,contract, or ISSA resources. For the purpose of the ISSA provisions of this instruction,the term ISSA means support provided by or to a Federal agency outside of DoD.Support agreements with other Army, Navy, or Air Force installations or with other DoDactivities are not governed by this instruction, with the following two exceptions:

a. Activities will perform a cost comparison when a Support Agreementwith another DoD activity would result in a change to or from contract performance.

b. Activities will conduct a cost comparison, under OMB Circular A-126,Improving the Management and Use of Government Aircraft (NOTAL) before providingaviation services.

B. Specific

1. Effective 1 October 1997:


I-20

a. An existing ISSA may be continued or renewed without cost comparisonstudy. Also, activities may consolidate support services into new, intra-service revolvingor franchise funds without a cost comparison study provided the consolidation does notchange the method of performance.

b. New or expanded ISSA support requests must be justified by a costcomparison.

c. If the ISSA provider has competed the same type work with the privatesector, the provider may increase capacity up to 30 percent or 65 civilian FTEs withouta cost comparison study. If a new or expanded ISSA would result in a conversion ofwork to or from in-house or contract performance, and a cost comparison study has notpreviously justified the provider's method of performance, a cost comparison study isrequired.

2. Cost comparison studies conducted to justify ISSA are subject toindependent review and appeal.

3. The commander may, with proper notification to the provider, terminate anISSA and convert directly to contract performance without a cost comparison study.However, a cost comparison study is required to convert the work to in-houseperformance.

4. A prospective provider responding to a formal solicitation will submit to therequesting agency a synopsis, management plan, and certification that the provider'sreimbursable cost estimate is developed in accordance with OMB Circular A-76 RevisedSupplemental Handbook (NOTAL). A complete response as required by the FAR is notnecessary.

5. Under no conditions will cancellation or delay of a cost comparison bidopening or contract award occur in order to permit an ISSA offeror to submit a price orreimbursable rate.

6. The requester may accept or reject the prospective provider's offer astechnically qualified or unqualified as it deems appropriate and without appeal.

7. Activity commanders who wish to provide commercial activities toanother agency may petition the agency to conduct a cost comparison study.


I-21

8. Cost comparison studies must be conducted prior to making an offer toprovide or receive commercial services to or from state or local government agenciesexcept for emergency circumstances such as disaster relief requirements.

Chapter 3—Cost Comparisons

A. General

1. Scheduling the Cost Comparison Analysis. Activity commanders willrecommend CA functions for cost comparison through their chain of command to theirmajor claimants and CNO (N4). The CNO (N4) will verify recommendations areconsistent with Navy-wide CA study efforts. Major claimants should make every effortto conduct studies of common functions at all sites on a claimant-wide basis or on aregional basis, or conduct consolidated studies of multiple functions at a single site.Activities should follow procedures contained in the Navy's Succeeding at Competition:Guide to Conducting Commercial Activities Studies and the Business Unit Definition andAnalysis Guide to determine the optimal composition and structure of the CA studyteam. Activities will coordinate these efforts to achieve the maximum efficiency for boththe study effort and the final organization that will accomplish the function.

2. Upon a decision to perform a cost comparison and after congressionalnotification, CNO (N4) will inform field activities and their major claimants. Commandsare then required to conduct local notification in accordance with the Public AffairsGuidance Appendix to this instruction.

3. Change in Number of Functions/Positions. Activity commanders haveauthorization to expand an announced CA function if the expansion is justifiable and itdoes not significantly increase the study effort. Any significant expansion, to includepreviously unannounced functions or a substantial increase to the number of studiedpositions, requires congressional announcement. Minor decreases in the number ofpositions under study does not require additional reporting; however, significantdecreases to the number of announced positions, or removal of congressionallyannounced functions from a study, requires CNO (N4) approval.

4. Cancellation. Cancellation of an entire A-76 study requires CNO (N4)approval. The request for cancellation should contain justification of why thecommercial activity is no longer suitable for competition with the private sector.

5. Plan of Action and Milestones. The CA team will establish a POA&M that willbe approved and monitored by the activity commander. While complexity, size, andprevious experience will influence CA study time requirements, activity commandersshould strive to complete each study in an aggressive manner. This plan must provide


I-22

for completing single function studies in less than 18 months and multi-function studiesin less than 36 months from the announcement date to the tentative decision to awarddate. Studies that extend beyond these limits must report a description of problemsencountered, remedial actions taken, status, and expected completion date to CNO(N4) via the chain of command prior to the deadline date. By law, single functionstudies must not extend beyond 24 months from announcement and multi-functionstudies must not extend beyond 48 months from announcement. Activities must submittheir POA&M, via the chain of command, for entry into the Commercial ActivitiesManagement Information System (CAMIS) within 60 days of the announcement of thestudy. Guidance for development of the POA&M are contained in Succeeding atCompetition: Guide to Conducting Commercial Activities Studies (NOTAL). TheReporting Requirements Appendix contains the minimum required milestones for thePOA&M. The 1999 DoD Appropriations Act, Section 8026

6. Major Claimant Oversight and Review. To verify compliance with costcomparison procedures, major claimants should conduct initial and periodic reviews oftheir ongoing cost comparisons. These reviews provide valuable feedback on thestatus and quality of ongoing CA studies. Navy experience has demonstrated that costcomparisons characterized by high levels of command attention and broad levels ofparticipation have proven the most successful, regardless of their outcome. At thecompletion of each review, claimants should provide to CNO (N4):

a. A brief report of the CA study team's findings

b. A list of deficiencies and directed corrective actions

c. Follow-up procedures verifying implementation of corrective actions

d. Lessons learned and suggested changes to Navy policy

B. The CA Study Team

1. The CA study team will include:

a. A CA team leader who is charged with overall study management and forassignment of duties and tasks to other team members. The team leader serves as theprimary liaison between the team and the rest of the organization, monitors actionmilestones, and arranges and conducts status briefings for the activity commander.The team leader also facilitates team meetings and arranges logistical details, andverifies that appropriate reference materials, office space, automation, supplies, and


I-23

administrative support is always available for the study team throughout the full term ofthe study.

b. A contracting office staff representative who is the primary individualresponsible for preparing the acquisition strategy, preparing the solicitation forbids/proposals based on the specific PWS requirements, determining the contractvehicle type, and evaluating the resulting bids/proposals. The team will assist thecontracting office staff representative with the solicitation and the source selectionprocess.

2. Refer to Succeeding at Competition: Guide to Conducting CommercialActivities Studies to determine study team composition and individual roles andresponsibilities.

3. Whenever possible, principal CA team members should be assigned on afull-time basis to minimize conflicts with their regular duties. If this is not possible,management should direct that team members’ participation be a priority duty and not“an intrusion on their regular jobs.” In that regard, study team members are responsiblefor fully contributing to the study process and carrying out their assignments betweenteam meetings.

4. Activity commanders should arrange CA training for the team leader andother team members, as required, in conducting CA studies.

5. Some individuals selected to participate on the source selection board (SSB)are precluded from performing activities related to the management study or in-housecost estimate due to the potential for conflict of interest. Likewise, the ProcurementIntegrity Act (Title 41 U.S.C. 423) prohibits some Government officials from acceptingcompensation from a contractor for 1 year after they served in certain specificacquisition positions or made specific decisions in connection with the award oradministration of a contract with a contractor. Refer all questions regarding theProcurement Integrity Act to the supporting OGC office.

C. Performance Work Statements

1. A well-prepared PWS is key to the successful completion of the costcomparison (standard or streamlined) or direct conversion. It is critical the PWS besufficiently comprehensive to permit objective verification that in-house, ISSA, orcontract performance satisfies Government requirements.

2. The PWS must be performance-oriented, specifying desired outputs ormeasures, and limiting directions as to how to achieve results while not, unnecessarily,


I-24

restricting private sector participation in the cost comparison. Since the PWS is thebasis for determining the Most Efficient Organization (MEO), it must clearly identify alltasks to be accomplished. As changes in performance and staffing requirements occurduring the solicitation process, it is essential that activities incorporate these changeswithin the PWS and MEO.

3. Navy activities will not develop a PWS unless adequate budgetedresources exist to accomplish the level of effort specified in the PWS. Activities mustindividually address additional funding, not meeting the criteria for expansion or newrequirements, necessary to accommodate the level of effort contained in the PWS.Field activities unable to reallocate funding from within existing assets will:

a. Revise the PWS to reflect affordable levels of effort, or

b. Request additional funding via the chain of command

D. Quality Assurance Surveillance Plans.A well-prepared Quality Assurance Surveillance Plan (QASP) is key to the successfulinspection of contract, ISSA, or in-house performance. The QASP describes methodsof inspection, performance metrics, required reports, and the needed resources,including estimated work hours, to verify quality. Although the QASP accompanies thePWS to the Independent Review Officer (IRO) to verify the cost comparison, it is notincluded as a part of the solicitation nor is it provided to private sector bidders orofferors.

E. Management Plans

1. The law requires the Navy to certify to Congress that the basis of thein-house cost portion of the cost comparison presents an estimate of the most efficientand cost-effective in-house organization needed to accomplish the workload describedin the PWS. The activity commander or other appropriate commander (e.g., a regionalcommander) will certify studies crossing geographical or claimant boundaries (using theActivity Tentative Decision Report) to their chain of command and CNO (N4) and willreport the completion of Independent Reviews to CNO (N4).

2. If the cost comparison decision is to continue in-house performance,activities will begin implementation of the proposed MEO within 30 days from thedecision to continue in-house performance.


I-25

3. To verify the integrity of both the MEO and the cost comparison, activitycommanders are responsible for implementing the Most Efficient Organization (MEO)that they certify. Activity commanders will certify, in writing, the in-house operation canperform the requirements established by the PWS and that actual staffing complies withthe MEO. Also, activity commanders will certify their activities' compliance, in writing,one year after MEO implementation as part of their Post-MEO Performance Review.

4. Navy activities will establish procedures to verify in-house operations, asstated in the MEO, are capable of performing PWS workloads. These procedures willverify:

a. Resources (i.e., personnel, facilities, equipment, supplies, etc.) specifiedin the MEO and IHCE are available to the in-house operation

b. In-house performance is accomplished within the resource levelspecified in the MEO for the period of performance, unless documentation to supportchanges in workload/scope is available

5. Transition Plan

a. The Transition Plan (TP) is a written plan that enables the transitionfrom the current organizational structure to MEO, contract, or ISSA performance. It isdesigned to minimize disruption and adverse impacts, and describes capitalization andstart-up requirements.

b. The TP will include milestones that begin the implementation ofconversion to MEO, contract, or ISSA within the first 30 days after a final costcomparison decision and end upon implementation of the MEO, contract, or ISSA. Itmust detail necessary personnel actions, personnel moves, appropriate training(including any required certifications), as well as non-personnel considerations such asmaterials and supplies, equipment, facilities, sub-contracts, leases, environmentalissues, safety and security, etc. It must also consider factors related to MEO operationif conversion of military billets to civilian authorizations requires a large concertedcivilian recruitment effort. This is especially important if the activity's location is awayfrom a large metropolitan area or if the activity's MEO requires personnel with highlytechnical skills.

c. The TP will include an Economic Impact Statement. Prepare anexamination of the potential economic impact of the performance of the function by theprivate sector if the reduction-in-force involves 75 or more activity civilian personnel.The statement must address DoD employees affected by such a change in performanceand an assessment of the impact to the local economy and government.


I-26

d. Activities will notify CNO (N4) through the chain of command if TPmilestones require extension.

F. Safeguarding the MEO.Activities will not publicly disclose the contents of the management study or thein-house cost estimate and must safeguard the confidentiality of the in-house bid.Activities will mark the management study with "FOR OFFICIAL USE ONLY--SENSITIVE IN NATURE." During the cost study process, activities will not release themanagement study to parties outside the immediate CA study team.

G. Solicitations

H. Methods of Procurement

1. All competitive methods of procurement authorized by the FAR areappropriate for cost comparison under OMB Circular A-76 and its RevisedSupplemental Handbook (NOTAL).

2. In selecting the method of procurement and contract type, the contractingofficer should analyze the PWS and apply the guidance contained in OFPP Policy Letter91-2, Service Contracting, and FAR Part 16, Types of Contracts, as supplemented.

3. Technical Performance Plan

a. The Technical Performance Plan (TPP) represents the In-houseoperation's technical approach and states all needed resources to meet therequirements of the PWS. Activities should prepare the TPP in accordance with therequirements in the solicitation and include these requirements in the MEO. There maybe some technical evaluation criteria that apply to the offerors that will not apply to thein-house TPP and the contracting officer will identify any non-applicable criteria.

b. The Source Selection Board will evaluate the Government’s proposalusing the TPP and assess whether or not the same level of performance will beachieved.

c. The TPP is a procurement sensitive document and is not releasable tothe public until final cost comparison decision.

4. Cost Comparison and Best Value Evaluation of Offers


I-27

a. If the contracting officer elects to use the tradeoff process discussed inFAR 15.101-1, the Government will base contractor selection on both the qualitativeaspects (e.g., experience, past performance, technical or management approach, etc.)and the quantitative aspects (e.g., price) of an offerors' proposal. This is the preferredcompetitive method for conducting most Navy competitions because it permits selectionbased on best overall value to the Navy and not just the lowest price.

b. To determine whether a function will be retained in-house or will beobtained by contract, the cost of the selected best value contractor’s proposal will becompared, in accordance with the provisions governing cost comparisons, with the costto perform the Government’s MEO. To make this a fair comparison, the scope of workand performance level of both the best value proposal and the Government's proposalmust be the same. Accordingly, it may be necessary to perform technical leveling(adjustment of the scope of work or the Government's technical performance plan) tomatch work contained in the proposal presented by the selected commercial offeror.After adjustment, the Government's proposal will be re-priced as necessary beforebeing compared with that of the selected commercial offer.

c. This final stage of the CA process is both critical and necessary inconducting a cost comparison using the best value source selection process. Becauseof the complexity of using a best value source selection process for conducting a costcomparison, the contracting officer must control and coordinate all source selectionactivities. This is necessary to maintain the integrity of the process and assure retentionof adequate documentation if the results are challenged.

I. The Independent Review

1. The Naval Audit Service (NAVAUDSVC) serves as the Independent ReviewOfficer (IRO) for all cost comparisons of functions involving 41 or more announced Navycivilian positions. The NAVAUDSVC's role is to provide oversight of the IRO supportcontractor and to certify cost estimates. Specific guidance for conducting theIndependent Review is contained in the Guide for Reviewing Cost Estimates PreparedUnder the Commercial Activity Program. A sample letter to request IRO support islocated at Deputy Chief of Naval Operations for Logistics Web site atwww.n4.hq.navy.mil.


I-28

2. To meet the requirements of OMB Circular A-76, a qualified person,independent of the activity preparing the estimate, will review cost estimates for costcomparisons involving 40 or fewer positions. This reviewer can be an internal manager,a management analyst, or a financial specialist versed in CA study cost procedures.The reviewer may request specific technical assistance in applying guidance from theNAVAUDSVC.

3. Commands requiring NAVAUDSVC reviews will provide sufficient advancenotice to the NAVAUDSVC at least 30 days prior to commencement of the IndependentReview.

4. The IRO will certify in writing that the Navy’s PWS, QASP, IHCE, MEO, TPPand TP comply with OMB Circular A-76. The IRO will follow the guidance contained inOMB Circular A-76.

5. Major claimants should be aware of differences in interpretation of costcomparison policy that may surface during the independent review. The CNO (N4) isthe final arbitrator of all such differences.

6. Activities will provide auditors with all final documentation and electronic filesbefore the actual site visit.

J. Evaluation of Bids and Tentative Decisions

1. Bid Opening/Announcement of Results

a. The OMB Circular A-76, Revised Supplemental Handbook (NOTAL)contains a complete description of the procedures for bid opening for sealed bidprocurement and announcement of results for negotiated procurements.

b. If no bids/proposals are received, or are unacceptable in response to asmall business or a small and disadvantaged business (8(a)) solicitation, the IHCE willremain unopened. Additionally, the contracting officer will examine the solicitation andascertain why there were no responses. Depending on the results of this review, thecontracting officer will restructure the solicitation, if feasible, and reissue it under smallbusiness set-aside or unrestricted solicitation procedures, as appropriate.

c. If no bids/proposals are received, or are unacceptable in response to anunrestricted solicitation, the activity will report this fact using the Activity Final DecisionReport and immediately begin implementation of their MEO.


I-29

2. Corrections to In-House Estimate after Bid Opening/Announcement ofResults

a. Periodically, CNO (N4) will publish updated inflation indices for use incost comparison studies. Cost estimates should use inflation indices in effect at thetime immediately prior to their Independent Review. Inflation indices issued aftercommencement of the Independent Review will not, in most instances, materially affectthe outcome of the cost comparison; therefore, do not recalculate the IHCE prior to bidopening. If, after bid opening, it appears that application of the latest inflation indiceswill materially affect the outcome of the cost comparison, the major claimant will reviewthe cost comparison and, if needed, recalculate the IHCE using inflation indices in effectat bid opening. In such instances, activities will apply new indices to the various costelements at the largest aggregate level.

b. Activities will make all other computational corrections after bid openingif it appears that the change might materially affect the outcome of the cost comparison.Computational corrections may include changes in fringe benefit rates, annual workhours, etc. The major claimant will direct recalculation if needed.

c. Activities will notify the NAVAUDSVC IRO of all changes made.

K. Appeals of Tentative Waiver and Cost Comparison Decisions

1. Administrative Appeal Procedure

a. The Administrative Appeal Procedure exists only to resolve questionsrelated to the cost comparison.

b. The responsible major claimant will verify appointment of an official toreview any decision under appeal. This Administrative Appeal Officer will meet OMBCircular A-76 criteria and additionally, if military, be at the same or higher rank as theofficial who approved the management plan.

c. Actual physical receipt of the appeal must occur within 20 calendar days(or within a maximum of 30 calendar days if the action is deemed to be complex by thecontracting officer) after the date that the supporting documentation is made available toall parties. The 20 to 30 calendar day period is the actual appeal period. At tentativedecision announcement, the activity will identify all Government IHCE documentationrequired by potential appellants. Cost comparison documentation will include, at aminimum:

(1) The IHCE with its detailed supporting data


I-30

(2) The completed cost comparison form

(3) The name and price of the apparent successful offeror/bidder

(4) The PWS and Management Plan

(5) All supporting data used to formulate the government bid

d. The contracting officer and the commander responsible for the studymust work together to complete the appeals process within the time allowed. Appellantswill file all appeals with the responsible contracting officer. The appeal must be inwriting and must contain specific objections with supporting information for eachobjection. All received appeals should be coordinated with the nearest OGCrepresentative to determine their sufficiency and merit. At the close of the appealperiod, the contracting officer will advise the apparent successful offeror/bidder or theaffected Federal employees' representative, as appropriate, if there was receipt of avalid appeal. The commander will notify CNO (N4) and their appropriate chain ofcommand addressees, by response, upon receipt of any appeals.

e. Within 2 working days of the end of the appeal period, the contractingofficer will provide copies of all appeals to all directly affected parties. All directlyaffected parties may file comments addressing objections and facts specified in theappeals. This invitation for comments is not an additional appeal period and there willbe no consideration of additional appeal issues. These comments must be in writing,must address specific objections to appeals raised by other interested parties and, tothe extent possible, must contain supporting data. Appellants should file comments withthe contracting officer within 3 working days of the end of the appeal period.

f. Due to the compressed schedule associated with the review process,the activity will provide the appeal officer with the working papers and other relevantinformation prior to or upon receipt of the first appeal. To facilitate a timely review, theactivity should also forward copies of appeals and comments to the appeal officer asthey are received rather than waiting until the end of the submission period. The appealofficer will independently and objectively review items raised by each appellant andrender decisions based on the issues in question, within the context of this guidanceand OMB Circular A-76. Activities will coordinate appeals of items requiring OPNAVapproval with CNO (N4) to verify review and approval of any proposed adjustments. Ifdiscovery of a procedural or computational error occurs involving an un-appealed itemduring documentation review of an appeal, the discoverer will cite the error and itscorrection in the appeal decision. It is not the appeal officer’s responsibility to re-audit


I-31

the entire cost comparison or to question the assumptions underlying the cost of eachitem not under appeal.

g. The appeal officer will submit a decision in writing, together with acopy of the appeal, to the appellants, the commander, the contracting officer, theapparent successful offeror/bidder, the representative of the affected Federalemployees, and CNO (N4) via the chain of command within 30 calendar days of theconclusion of the appeal period. Appeal decisions are final and not subject to review.The commander and the contracting officer will retain a copy of the decision. Thecommander will make copies of the appeal decision available to all directly affectedparties. The commander will then submit an Activity Final Decision Report to CNO (N4)incorporating any revisions necessitated by the appeal officer's decision.

h. Following the appeal officer's decision, the appeal officer, in coordinationwith the commander, will provide CNO (N4) and the NAVAUDSVC a summary of"lessons learned" together with any recommendations concerning issues raised duringthe appeal process.

2. Protests. Directly affected parties may file protests concerning the selectionof the best private sector proposal with the contracting officer or the General AccountingOffice. The ultimate responsibility for responding to a CA-related bid protest lies withthe contracting office issuing the solicitation or requesting the proposals. Timelycoordination of all documents and marshalling of all facts to support argumentsadvanced is the responsibility of the major claimant. The major claimant will appoint anofficial who will be responsible for developing and coordinating the claimant's positionfor all protests concerning claimant decisions. The time constraints associated with theprotest process require expeditious action on the part of all concerned parties. Activitieswill coordinate all arguments advanced by the contracting office or claimant concerninginterpretations of Navy CA policy with CNO (N4).

L. Post-MEO Performance Review

1. Activity commanders will perform a Post-MEO Performance Reviewfor services performed in-house as a result of a cost comparison at the end of the firstfull year of performance. This review will establish the MEO’s ability to perform theservices specified in the PWS and confirm that costs are within the estimate of the costcomparison. This review should result in correction of minor cost or performancedeficiencies to maintain the integrity of the cost comparison process. If the reviewreveals failure to implement the MEO according to transition and management plansthat cannot be corrected, the claimant will recommend to CNO (N4) to initiate a newcost comparison study if award to the next participating offeror is not feasible.


I-32

2. Claimants, after 1 full year of performance, will review not less than 20percent of their activities' functions performed in-house as a result of cost comparisonscompleted in the prior year. Claimants will submit results of their Post-MEOPerformance Reviews to CNO (N4) within 30 days of their completion.


II-1

Part II—Preparing the Cost Comparison Estimates

Chapter 1—Implementation Instructions

A. General.Address requests for deviation from the following amplifying Navy requirements to CNO(N4). Requests should clearly indicate the special circumstances that require thechange. The Navy cannot grant waivers or deviations from individual portions of theOMB Circular A-76 guidance or from the legal requirements listed in the appendixentitled Principal Statutes Governing CA. The Assistant Secretary of the Navy maywaive the entire cost comparison as provided by OMB Circular A-76 provided the CAmeets legal requirements as stated in the appendix entitled Principal StatutesGoverning CA.

B. Organization

Chapter 2—Developing the Cost of Government Performance

A. General

1. Overview

2. Standard Cost Factors

3. Common Costs

4. Retained and Save Pay

5. Cost of Conducting a Cost Comparison

6. Proration of Performance Periods

7. In-House Costs

8. Minimum Cost Differentials


II-2

9. Rounding Rule

10. Inflation

11. Other ISSA Adjustments

B. Personnel (Line 1)

1. Military Billets. Activities will convert all military billets in the organizationunder study to civilian positions for the purpose of cost comparison unless the militarypositions will remain as a part of the MEO. Base the civilian grade level requirement oncivilian grade standards and the nature of the performed work and not on any civilian-to-military grade relationship. If available, use advisory position classification guides for allproposed MEO positions. Actual position classification should include participation ofHRSC/HRO personnel classification specialists in the assessment and development ofMEO civilian grades and positions. Grade levels must be consistent with performanceof the PWS.

2. Civilian Personnel. Express personnel requirements in full-time equivalent(FTE) workyears. When using productive hours as the basis for computing FTEs, useannual available hours for full-time positions and intermittent positions. Document theapplied method in the management study when methods other than productive hoursare used (i.e., manpower standards, staffing guides, prior experience, workmeasurement, etc.). Express salary/step for pay banded or demonstration projectemployees at the mid-grade or mid-band level.

3. Temporary Employees. Do not interpret the authority to make and extendtemporary limited appointments as approval for costing the MEO positions as temporaryif work described in the PWS is not of a temporary nature (i.e., work that is seasonal,variable, or of short duration). Cost work of a continuing and recurring nature aspermanent positions although these positions may be encumbered with temporaryemployees at the time of PWS and MEO development.

4. Nonappropriated Fund Employees. Apply the following fringe benefit factorswhen computing the cost of NAF labor:


II-3

FRINGE BENEFIT FULL TIME PART TIME INTERMITTENTRetirement 7.65 7.65 7.65Insurance/Health 8.7 6.2 0.0Miscellaneous* 3.5 5.1 6.5*This includes workman's compensation, bonuses/awards, and unemployment programs.

5. Service Contract Act/Davis Bacon Act: Commercial activities' contracts mayrequire the application of the Service Contract Act (SCA) or the Davis-Bacon Act (DBA).Determine the applicability of either Act based upon historical records or projected workestimates. When SCA/DBA applies, the contracting officer must obtain the latestappropriate wage determination and place it in the solicitation package. Most standardwage rates can be obtained through DoD’s WDOL system. For all other wage rates,use the procedure at FAR 22.10. If the solicitation is delayed by more than 60 days, thecontracting officer must query the WDOL system to ensure that the solicitation containsthe appropriate wage determinations. DFARS 222.402-70. When the natureof the work is clearly service related, the SCA will apply regardless of dollar value.Installation support services such as building maintenance, grounds maintenance, plantoperations, custodial services, and snow removal may be subject to both the SCA andDBA. The DBA type work performed in conjunction with routine maintenance and with acost of $2,000 or less may be performed using SCA wage determinations. DBA workexceeding $2,000 should be covered by a DBA wage determination. Service ContractAct (Title 41 U.S.C. 351-358).

C. Material and Supply (Line 2)

D. Other Specifically Attributable (Line 3)

Contractor Use of Government Facilities and Equipment. Determine any decision tooffer, or not to offer, Government property to a contractor by performing a cost benefitanalysis to verify cost decisions are in the best interest of the Government. Involved orcomplex analyses are not required, particularly when the benefits of one option arerelatively clear. Analyses should document the rationale for the decision.

1. Overview

2. Depreciation

3. Cost of Capital.


II-4

The cost of capital is a straight-line calculation through the life of the asset and isincluded for each year the asset is used in the cost comparison period of performance.The cost of capital is calculated by multiplying the nominal rate provided by OMBCircular A-94, Discount Rates to be Used in Evaluating Time-Distributed Costs andBenefits (NOTAL) for each year of the cost comparison. The inclusion of cost of capitalshould be exceptional.

4. Rent

5. Maintenance and Repair

6. Utilities

7. Insurance

8. Travel

9. MEO Subcontract Costs.Purchased services (MEO subcontract costs) significantly augmenting currentin-house work efforts and included in the PWS require special consideration. Whenthese purchased services are long-term and contain labor costs subject to economicprice adjustment clauses, do not escalate the applicable labor portion by future yearinflation factors. Additionally, purchased services will be offset for Federal income taxrevenue by applying the appropriate rate found in OMB Circular A-76, RevisedSupplemental Handbook Part II, chapter 3, paragraph G (NOTAL). Identify and includethe costs of contract administration associated with purchased services in the costcategory. When incorporating subcontract costs into the MEO, activities will adjust theconversion differential when increasing or decreasing the current level of subcontractperformance within the MEO. For example, when existing contract work is proposed tobe converted to in-house performance in the MEO, the conversion differential (10percent) applicable to in-house work is included in line 16 of the cost comparisonworksheet. In addition, the conversion differential applicable to contract work isincluded in line 15 (Adjusted Total Cost of In-House Performance).

10. Other Costs

E. Overhead (Line 4)


II-5

F. Additional (Line 5)

G. Total Cost—In-House Performance (Line 6)

Chapter 3—Developing the Cost of Contract Performance

A. General.Solicitations should specifically state the performance start date. Estimate the date forsolicitations that do not specifically state the performance start date.

B. Contract Price (Line 7)

1. Overview

2. Contract Types

3. Tax Exempt Organizations

4. Procurement Preference Eligible Organizations

C. Contract Administration (Line 8)

1. The OMB Circular A-76, Revised Supplemental Handbook, Part II, Chapter 3(NOTAL) establishes procedures to estimate the number of FTEs to administer acontract, however; the Circular is silent regarding the appropriate grade levels forcosting these FTEs. Activities performing the cost comparison will make this gradelevel determination. Since grade levels performing these tasks will depend upon thetechnical nature and complexity of the contract review functions, activities should usepast experience to determine grades. Activities should consult with local contractingoffices and may use previous and current contracts as supporting documentation.

2. Determining contract administration positions for MEO subcontracts. Includethe estimated number of contract employees when computing contract administrationpositions for an MEO that will continue using subcontracted activities. Do not includecontract administration positions for MEO subcontracts:


II-6

a. When making existing contracts available to a prospective contractor orISSA provider.

b. During resolicitation of existing MEO subcontracts that are part of asolicitation based on an "any or all" bid or offer where separate line item bids arerequired for the workloads performed by the in-house workforce and the MEOsubcontracts.

D. Additional (Line 9)

E. One-Time Conversion (Line 10)

1. Overview.

2. Material Related Cost.Excess Material. Upon conversion, if activities decide to transfer excess materials fromthe function under study to another Navy or Governmental use, state the originalmaterial cost less the cost of disposal or transfer. Since such actions would be takenwhen they would result in a net benefit to the Government, enter net gains as a negativecost of contracting. For costs associated with disposal/transfer of excess Governmentmaterial, contact the nearest transportation shipping office to determine the applicablerates for packing, crating, handling (PCH) and transportation.

3. Labor Related Costs

a. Permanent Change of Station (PCS) Costs. The following policy appliesto MEO positions:

(1) Inclusion of any civilian PCS costs must be fully documented in thecost comparison support file. Activities that anticipate more than 10 percent of affectedpersonnel requiring PCS will contact CNO (N4) for further guidance. When requestingapproval, provide the following:

(a) A discussion of the assumptions used in developing theestimated number of PCS moves and anticipated costs. Include an estimate of thenumber of employees that will participate in exercising their Right of First Refusal.


II-7

(b) A list of all DoD installations in the commuting area with a briefdescription of their employment opportunities. Provide information on the availability ofpositions available through the Priority Placement Program (PPP) for the appropriateregion. If CNO (N4) approves inclusion of PCS costs based on a higher percentage ofemployees requiring PCS moves, and the competition results in contract award, thefollowing information is required within 1 year after execution of the contract:

1. Number of employees enrolled in PPP

2. Number of employees transferring within the PPP programand not requiring a PCS move

3. Number of employees transferring within the PPP programrequiring a PCS move

b. Security Clearances. A CA cost comparison involving employee accessto classified materials will include the costs of the investigations required for theappropriate security clearances for contract personnel. The CNO (N4) will providethese costs via response to the CA address indicator groups (AIG) for use in costcomparisons. Since costs of clearances will presumably be the same for bothGovernment and contractor in the out-years, costs are included only on a one-timebasis. Use the number of personnel in the MEO to estimate the number of clearancesrequired.

c. One-Time Inventory Costs. Inclusion of a one-time cost to perform aninventory prior to turnover of equipment, parts, and materials to contractors must beapproved by CNO (N4) if the estimated cost to perform the inventory is greater than theproduct of the In-House Cost Estimate’s line 1, Personnel, First full Year of Performancetotal cost multiplied by .005. Submit requests for approval via the chain of commandand document the requirement for the one-time expenditure. Submit the followinginformation together with any other information pertinent to the approval process:

(1) The rationale for the kind of inventory planned (i.e., 100 percentversus selected inventory of higher value items) and approximate number of items forinventory, breakdown by categories, and estimated value

(2) Dates and results of the most recent inventories


II-8

(3) An estimate of workhours and cost to perform the inventory

d. Unemployment Insurance. The OMB Circular A-76 provides guidance onthe accrual of unemployment insurance. Specifically, unemployment insurance isincluded in the 1.7 percent (Part II, chapter 2, B6f(1)(c), Fringe Benefits or FederalInsurance Contribution Act (FICA) accrual of fringe benefits. Activities will not includeadditional estimated cost of unemployment insurance as a one-time conversion cost.

e. Separation Incentive Pay will not be included as a cost.

4. Other Costs

5. One-Time Cost Computation

F. Gain from the Disposal/Transfer of Assets (Line 11).Gain or Loss on Disposal/Transfer of Assets. The estimated disposal value minus thedisposal/transfer cost will result in a net disposal value. Enter this as a gain thatdecreases the cost of contracting. If there is no realization of net gain, it is more costeffective to furnish the asset to the contractor; therefore, do not enter a net loss in thecost comparison. Disposal value estimates are available in OMB Circular A-76,Revised Supplemental Handbook, Appendix 3 (NOTAL). The estimated disposal valuewill be the net book value in the absence of precise values. The property disposalofficer or other knowledgeable authority should make and/or confirm disposal valueestimates. Contact the nearest transportation/shipping office to determine theapplicable rates for packing, crating and handling (PCH) and transportation.

G. Federal Income Tax (Line 12)

H. Total Cost—Contract Performance (Line 13)

Chapter 4—Calculating the Cost Comparison Decision

A. Conversion Differential (Line 14)

B. Adjusted Total In-house Cost (Line 15)

C. Adjusted Total Contract Cost (Line 16)


II-9

D. The Cost Comparison Decision (Lines 17/18)

Chapter 5—Streamlined Cost Comparisons for Activities with 65 FTE or Less

A. General

1. Section 8014 of the FY 99 Defense Appropriations Act (the following whichhas been repeated for more than a decade) states "None of the funds appropriated bythis Act shall be available to convert to contractor performance an activity or function ofthe Department of Defense that, on or after the date of enactment of this Act, isperformed by more than 10 Department of Defense civilian employees until a mostefficient and cost-effective organization analysis is completed on such activity orfunction and certification of the analysis is made to the Committees on Appropriations ofthe House of Representatives and the Senate: Provided, That this section andsubsections (a), (b), and (c) of 10 U.S.C. 2461 shall not apply to a commercial orindustrial type function of the Department of Defense that: (1) is included on theprocurement list established pursuant to section 2 of the Act of June 25, 1938 (41U.S.C. 47), popularly referred to as the Javits-Wagner-O'Day Act; (2) is planned to beconverted to performance by a qualified nonprofit agency for the blind or by a qualifiednonprofit agency for other severely handicapped individuals in accordance with that Act;or (3) is planned to be converted to performance by a qualified firm under 51 percentum Native American ownership."

2. While the OMB Circular permits certification of an MEO for an activitycontaining 65 FTE or less without conducting a formal cost comparison, the law requiresNavy activities to formulate an MEO for cost comparison with the private sector for anyactivity containing 11 or more FTE. Formulating a small MEO should not requireextensive study and could be very similar to the existing organization.

B. Procedure.Refer to SUCCEEDING AT COMPETITION: Guide to Conducting Commercial ActivitiesStudies, appendix A for procedures to conduct an A-76 Streamlined Cost Comparison.


A-1

Appendix A--Definition of Terms and Acronyms

Acquisition Plan (AP). The AP addresses the technical, business, management, andother significant considerations that will control acquisition.

Activity. A unit, organization, or installation performing a function or mission.

Administrative Appeal Authority. An individual who is independent of the activity underreview or at least two organizational levels above the individual certifying the MEO.This individual adjudicates appeals then reviews appeals to verify that all costs areproperly accounted for in accordance with this instruction, and verifies eligibleappellants have full and equal access to the cost comparison decision process.

Affected Civilian Employees. Navy civilian employees who may be adversely impactedby a tentative cost comparison decision. Affected civilian employees include those inthe function converted to contract or MEO and civilian employees outside the functionbut in the competitive area of the cost comparison.

Bid Opening. For a sealed bid procurement, bid opening is the date and timeestablished to open, read aloud, and display the bids received in response to anInvitation For Bids. For a negotiated procurement action, the term is solicitation closingdate which is the time set in the Request for Proposals by which all proposals must bereceived.

Commander/Activity Commander. Usually, the commanding officer or head of anactivity that has budget and supervisory control over resources and personnel. In somecases, due to overlapping authority and responsibility or the need to defer decisionauthority to a higher level, the term may include a commander of a regional activity, thecommander of a major claimancy, or a senior level activity commander.

Commercial Activity (CA). An activity that provides a product or service obtained (orobtainable) from a commercial source. A Navy commercial activity is not an InherentlyGovernmental function. A Navy commercial activity may be an organization or part ofan organization. It must perform a type of work that is separable from other functions oractivities so that it is suitable for performance by contract. A representative list of thefunctions performed by such activities may be found in OMB Circular A–76, RevisedSupplemental Handbook, enclosure 3 (NOTAL). A Navy commercial activity falls intoone of the following two categories:


A-2

1. In-House Commercial Activity. A Navy CA operated by a Navy activity with Navypersonnel.

2. Contract Commercial Activity. A Navy commercial activity managed by a Navyactivity operated with contractor personnel or by a non-DoD Federal agency (i.e., ISSA).Commercial Activities Inventory. A listing of all in-house and contracted commercialactivities and their associated FTEs.

Commercial Activities Management Information System (CAMIS). The automatedsystem used to track, collect, and maintain data for cost comparisons and directconversions. The CAMIS is required for compliance with Title 10 U.S.C. 2463,Executive Order 12615, Performance of Commercial Activities, OMB Circular A-76, andDODI 4100.33, 9 September 1985 (NOTAL).

Commercial Source. A commercial source is any business or other concern that iseligible for contract award in accordance with Federal Acquisition Regulations.

Conditional Contract Award. A contract award made upon the initial decision in a costcomparison involving a negotiated acquisition. Contractor performance is conditionedon the contractor’s proposal continuing to be deemed the most advantageous offer aftercompletion of the Administrative Appeal process.

Contract Administration. Contract administration includes those inherently governmentalactivities performed by warranted contracting officers (CO), the contracting officer'stechnical representatives (COTR), and related payment evaluation staff. Contractadministration is not to be confused with contract quality control and performanceevaluation or inspection which are defined as commercial activities by OMB CircularA-76, Revised Supplemental Handbook and Office of Federal Procurement Policy(OFPP) Policy Letter 92-1 (NOTAL).

Contract Award Date. The date the contract is awarded by the Government.

Contract Start Date. The date work is scheduled to begin under contract performance.

Contracting Officer. A contracting officer is the only person with the authority to create,modify, or terminate a contract.


A-3

Conversion Differential. The conversion differential is the minimum gained savingsprojected before converting from one method of operation to another. The differentialreflects the unpredictable costs inherent in changing the status quo. These includesuch costs as retained pay and the temporary loss of productivity associated with aconversion. The conversion differential is the lesser of 10 percent of governmentpersonnel costs or $10 million over the performance period.

Conversion to Contract. The changeover of a commercial activity from performance byNavy personnel to performance under contract by a commercial source.

Conversion to In-House. The changeover of a commercial activity from performanceunder contract by a commercial source to performance by Navy personnel.

Conversion to ISSA. The changeover of a commercial activity from performance byNavy personnel to performance by a non-DoD Federal agency.

Cost Comparison. A cost comparison is the formal process comparing the estimatedcost of Government performance to the cost of performance by a contractor or ISSAprovider.

Current Organization. The state of the organization as it exists at the beginning of thestudy, including staffing, organization, facilities, equipment, and any conditions thataffect efficient operation.

Department of Labor Wage Determination. A Department of Labor determination on theminimum wages and fringe benefits to be paid by the contractor for certain skills in aparticular geographic area.

Direct Combat Support Function. Work that is essential to the support of combatoperations and if not performed could cause immediate impairment to combatcapability.

Direct Conversion. The act of converting an activity to or from an in-house, contract, orInterservice Support Agreement (ISSA) performance without first conducting a costcomparison.

Economic Impact Statement. A statement as to the economic impact to the communityresulting from conversion. If more than 75 employees of all categories (military, civilian,


A-4

permanent, temporary, etc.) are affected by conversion, activities will assess theeconomic impact on the local community and the Federal Government. Activities mustaddress economic impact after bid opening and after contract costs are known.Activities will address the following items in the economic impact statement (Title 10U.S.C. 2461):

1. Total population of the affected community

2. Change in business volume of the affected community

3. Change in total personal income of the affected community

4. Change in total employment of the affected community

5. Impact on tax base of the affected community

Expansion. An expansion is the modernization, replacement, upgrading, or theenlargement of an in-house commercial activity or capability. If the expansion involvesa 30-percent increase in the operating cost of the activity, a 30-percent increase in thetotal capital investment to perform the activity or an increase of 65 FTE or more, a costcomparison is required prior to authorizing in-house performance. A consolidation oftwo or more existing commercial activities is not an expansion, unless the totaloperating cost is 30 percent greater than the total of the individual components or itrequires an increase of 65 FTE or more. The above definition notwithstanding, pursuantto OMB Circular A-126 all aircraft purchase decisions should be justified through formalcost comparison, as provided by the OMB Circular A-76, Revised SupplementalHandbook (NOTAL).

Federal Acquisition Regulation (FAR). The FAR provides contracting policy for theFederal Government. The FAR is the primary regulation for use by all ExecutiveAgencies in their acquisition of supplies and services.

Final Cost Comparison Decision. This is a decision resulting from a comparison ofcosts between the Government and private sector bids or offers made after the publicreview period and Administrative Appeal Period have been completed.


A-5

Full-Time Equivalent (FTE). For full and part time civil servants, calculate total hoursrequired by skill and divide by 1,776 to determine FTE. For intermittent positions, divideby 2,007.

Function. The appropriate or assigned duties, responsibilities, missions, or tasks of anindividual, office, or organization.

Independent Review. The independent review substantiates the currency,reasonableness, accuracy, and completeness of all cost, and cost information, prior tocost comparison. This includes verifying the PWS is the basis for the in-house costestimate as presented in the solicitation and verifying the sufficiency of the QASP, TPP,TP, MEO, and IHCE and their conformance to OMB Circular A-76, RevisedSupplemental Handbook (NOTAL).

Independent Review Officer (IRO). The Navy official who reviews and certifies the costcomparison has been prepared in accordance with this instruction.

Inherently Governmental Activity. An activity that is so intimately related to publicinterest as to mandate performance by Government personnel. These activities requirethe exercise of discretion in applying Government authority, the use of value judgmentin making decisions on behalf of the Government, or obligation of funds andentitlements.

Invitation for Bid (IFB). The request to potential offerors for bids in a sealed bidacquisition.

Interservice Support Agreement (ISSA). An agreement between Federal agencies. Forpurposes of this instruction, DoD is defined as an agency (i.e., individual DoDcomponents and Services are considered one agency).

Joint Interservice Regional Support Group (JIRSG). The JIRSG coordinators facilitatecommunication and cooperation among area commanders, directors, and activityrepresentatives with similar interests or responsibilities. Coordinators evaluateproposed ideas for cooperative ventures and facilitate implementation of ideasapproved by participating activities.


A-6

Management Plan. The Management Plan documents the changes that will result inthe MEO to perform a CA in-house. It provides the staffing patterns and operatingprocedures that serve as a baseline for in-house cost estimates.

Market Analysis. An analysis of at least three comparable contracts, performed by thecontracting officer, to determine an estimated range of contract prices. It is also used todetermine if commercial sources exist and to determine if an exercised contract optionwill result in fair and reasonable prices.

Most Efficient Organization (MEO). The Government’s in-house organization deemedto be the most efficient to perform the work specified in the PWS.

Multi-Function Study. A study that includes more than one CA Function Code or morethan one geographic location.

Negotiated Acquisition. A type of acquisition strategy where contractors submit offers inresponse to a request for proposals, followed by negotiations with contractors prior toconducting the cost comparison.

Navy Civilian Employee. A U.S. direct hire civilian employee of the Department of theNavy.

Navy Personnel. Refers to both military and civilian personnel of the Department of theNavy.

New Requirement. A newly established need for a commercial product or service. Anew requirement does not include interim in-house operation of essential servicespending re-acquisition of the services prompted by such action as the termination of anexisting contract operation.

Nonappropriated Fund Instrumentality (NAFI). An integral DoD organizational entitythat performs a government function. It acts in its own name to provide or assist DoDComponents in providing morale, welfare, and recreational programs for militarypersonnel and authorized civilians. It is established and maintained individually orjointly by the heads of the DoD Components. As a fiscal entity, it maintains custody ofand control over its nonappropriated funds. It is also responsible for the reasonablecare to administer, prudently safeguard, preserve, and maintain those appropriated fundresources made available to carry out its function. With its nonappropriated funds, it


A-7

contributes to the morale, welfare, and recreational programs of other authorizedorganizational entities. It is not incorporated under the law of any state or the District ofColumbia, and it enjoys the legal status of an instrumentality of the United States.

Offer. A contractor’s proposal used for pricing a contract or contract modification innegotiated acquisitions.

Overhead. Overhead is included in the in-house cost estimate and is defined as coststhat are not 100 percent attributable to the activity being cost compared but aregenerally associated with the recurring management or support of the activity.Overhead includes functions such as human resources, resource management, legal,procurement, etc.

Performance Work Statement (PWS). A document that accurately describes theessential and technical requirements for services and materials. The PWS complieswith the FAR, establishes the scope of work, and is the basis for all costs entered on thecost comparison form. Upon award, it becomes part of the contract.

Post-MEO Performance Review. A Post-MEO Performance Review confirms thatimplementation of the MEO is in accordance with the Transition Plan and the MEO isoperating within cost.

Preferential Procurement Program. These are special commercial source programssuch as Federal Prison Industries and the workshops administered by the Committeefor Purchase from the Blind and Other Severely Handicapped under the Javits-Wagner-O’Day Act.

Privatization. The process of changing a Navy activity to private control or ownership.It does not include determination as to whether a support service should be obtainedthrough public or private resources when the Government retains full responsibility andcontrol over the delivery of those services.

Procurement Integrity Act. The Procurement Integrity Act (Title 41 U.S.C. 423)generally establishes prohibitions, restrictions, and requirements relative to disclosing orobtaining procurement information, reporting employment contacts, and post-government employment.


A-8

Proposal. An offer used for awarding a contract or contract modification in negotiatedacquisitions.

Proposed Organization. A detailed description of the MEO, including staffing,organization chart, operating procedures, facilities, equipment, supplies, etc.

Quality Assurance Evaluator (QAE). A QAE inspects and certifies contractorperformance to the contracting officer.

Quality Assurance Surveillance Plan (QASP). A document containing sampling guides,checklists, and decision tables used for contractor or MEO quality assurancesurveillance.Regionalization. The consolidation/realignment of functions/positions eithergeographically or organizationally to streamline and achieve savings through theelimination of duplicative positions.

Reporting Component. A shore-based organization that has been assigned a UnitIdentification Code (UIC) except for military units subject to deployment in a combat orcombat support role.

Request for Proposal (RFP). The request to potential offerors for offers using thenegotiated acquisition process.

Right of First Refusal. The right provided to civilian employees, including termemployees, permanent NAF employees and term NAF employees adversely affected bythe cost comparison (standard or streamlined) or direct conversion. The "Right of FirstRefusal" clause is contained in FAR 52.107-3.

Sealed Bid Acquisition. A type of acquisition strategy where contractors submit bids inresponse to an invitation for bids and no negotiations are conducted with contractorsprior to conducting the cost comparison.

Separable or Severable Function or Activity. Work in an in-house activity that can beseparated or severed from the rest of the activity or function in a manner that will (1)preclude creation of a personal services contract or (2) permit performance by either acontractor or MEO in accordance with a PWS.


A-9

Service Contract Act. A law established to set service contract minimum wages forskilled labor in service contracts performed on Government installations. Title 41 U.S.C.351-358

Single-Function Study. A study that includes only one CA Function Code at only onegeographic location.

Standard Cost Comparison. A standard formalized OMB process where Navy activitiesdefine minimum requirements to compete a commercial activity. After issuance of asolicitation in accordance with the FAR, cost comparison between the private sector(contractors) and public sector (Navy) takes place. The basis for the Government bid isthe MEO. A standard cost comparison may be performed on any size CA.

Streamlined Cost Comparison. The process of determining whether a commercialactivity should be performed by in-house personnel, by contract, or through ISSA inaccordance with OMB Circular A–76, Revised Supplemental Handbook, Part II,Chapter 5 (NOTAL).

Study/CA Study. Term used to describe the entire process of conducting a costcomparison in accordance with OMB Circular A-76, including developing the PWS andQASP, determining the MEO, developing the cost of the MEO, issuing an RFP,comparing the cost of in-house performance to the cost of contractor performance, andconducting the Administrative Appeal process.

Technical Leveling. Adjustment of the PWS scope of work and/or the Government'sTechnical Performance Plan to achieve the same level of performance and performancequality between the Government and bidders.

Technical Performance Plan (TPP). A TPP represents the technical approach andexpended resources by the Government in meeting the requirements of the PWS. It isprepared in accordance with the requirements specified in the solicitation and depictsthe requirements specified in the MEO.

Transition Plan (TP). A written plan for the transition from the current organizationalstructure to MEO, contract, or ISSA performance designed to minimize disruption andpreclude adverse impacts and establish capitalization and start-up requirements. TheTP verifies the MEO, contract, or ISSA implementation will begin within the first 30 daysafter a final cost comparison decision.


A-10


A-11

Acronyms

APAcquisition Plan

CACommercial Activity/Activities

CAMISCommercial Activities ManagementInformation System

CBDCommerce Business Daily

CCFCost Comparison Form

CORContracting Officer's Representative

DBADavis-Bacon Act

DFARSDefense Federal Acquisition RegulationSupplement

DORSDefense Outplacement Referral Service

FARFederal Acquisition Regulation

FTEFull-time Equivalent

IFBInvitation for Bid

IHCEIn-House Cost Estimate

IROIndependent Review Officer

ISSAInterservice Support Agreement

JWODJavits-Wagner-O'Day Act

MEOMost Efficient Organization

NAFNon-appropriated Fund

NAFINon-appropriated Fund Instrumentality

NIBNational Industries for the Blind

NISHNational Industries for the SeverelyHandicapped

OMBOffice of Management and Budget

POA&MPlan of Action and Milestones


A-12

POMProgram Objective Memorandum

PPPPriority Placement Program

PRProgram Review

PWSPerformance Work Statement

QAEQuality Assurance Evaluator

QASPQuality Assurance Surveillance Plan

RFPRequest for Proposals

RIFReduction in Force

ROFRRight of First Refusal

SCAService Contract Act

SSASource Selection Authority

TFMMSTotal Force Manpower ManagementSystem

TPTransition Plan

TPPTechnical Performance Plan

U.S.C.United States Code


B-1

Appendix B—Mandatory/Advisory Publications and Internet Resources

Commercial ActivitiesNUMBER/

PROPONENTTITLE DATE M/A* World Wide Web Address

http://Navy Succeeding at Competition 14 Jan 97 A www.fac131.navfac.navy.mil/cssoNavy Business Unit Definition and Analysis Guide 31 Dec 97 A www.fac131.navfac.navy.mil/cssoNavy Guide for Reviewing Cost Estimates Prepared Under the

Commercial Activities Program28 Feb 97 A www.fac131.navfac.navy.mil/csso

Navy Guide to Preparing the Technical Performance Plan 1 Aug 97 A www.fac131.navfac.navy.mil/cssoNavy Guide For Conducting 10 and Under Study 2 Jan 98 A www.fac131.navfac.navy.mil/cssoNavy SECNAVINST 12351.5E, Approval and Notification of Civilian

Reduction-in-Force, Transfer of Function, and Furlough Actions4 Mar 93 M neds.nebt.daps.mil/

Navy OPNAVINST 4000.84B, Interservice and IntergovernmentalSupport Program

14 Nov 96 M neds.nebt.daps.mil/

OMB Circular A-76, Performance of Commercial Activities 4 Aug 83 M www.whitehouse.gov.omb/OMB Circular A-76 Revised Supplemental Handbook Mar 96 M www.whitehouse.gov.omb/DODI 4100.19 Interservice and Intergovernmental Support 9 Aug 95 M web7.whs.osd.mil/DODI 4100.33 Commercial Activities Program Procedures 9 Sep 85 M web7.whs.osd.mil/DODD 4100.15 Commercial Activities Program 10 Mar 89 M web7.whs.osd.mil/GSA Federal Acquisition Regulation N/A M www.arnet.gov/References/DOD Defense Federal Acquisition Regulation Supplement N/A M www.acq.osd.mil/dp/dars/dfars.htmlNavy Navy Acquisition Procedures Supplement (NAPS) N/A M www.acq-ref.navy.milOFPP 91-2 Service Contracting 9 Apr 91 M www.arnet.gov/References/OFPP 92-1 Inherently Governmental Functions 23 Sep 92 M www.arnet.gov/References/Navy OPNAV N4 Logistics www.n4.hq.navy.milNavy SSO www.fac131.navfac.navy.mil/cssoNavy Navy Personnel Command www.bupers.navy.milNavy Acquisition Reform Office www.acq-ref.navy.milNavy NAVAUDSVC www.hq.navy.mil/navalauditDOL DOL Wage Rates www.ceals.usace.army.milMilitary Rates DoD Comptroller www.dtic.mil/comptroller/rates/M-Mandatory, A-Advisory Note. In the event these addresses change, please use an Internet search engine to locate them.


C-1

Appendix C--Reporting Requirements

Public law, Acts of Congress, OMB Circular A-76, and DoD regulations require variousCA reports. Claimants are responsible for entering their activities' data into theCommercial Activities Management Information System (CAMIS) to allow CNO (N4) tomanage and communicate required A-76 data to Congress. Claimants may submit theActivity Tentative Decision Report and the Activity Final Decision Report for Full CostComparison and Simplified Cost Comparison and the Activity Final Decision Summaryreport for Direct Conversion using e-mail, fax, or Navy message. Title 10 U.S.C. 2463

1. Commercial Activities Reporting--Full Cost Comparison and Simplified CostComparison

a. Initial and Quarterly Plan of Action & Milestones (POA&M)

(1) Following announcement of a CA study, activities will establish, in concertwith their chain of command and local contracting office, a POA&M to complete eachCA cost comparison. Milestones tracked by CNO (N4) for each study are:

(a) The PWS and QASP target completion date

(b) Expected contract solicitation date

(c) Management Plan completion date

(d) Independent Review start date

(e) Receipt of proposals date

(f) Tentative Decision date

(g) Contract or MEO start date

The PWS and QASP target completion date is the anticipated date that the contractingofficer has affirmed that both the PWS is a contractible document and the QASP iscomplete. The tentative decision date is the proposed date of bid opening for sealedbid procurements or the anticipated date the selected offeror's price will be comparedwith the government estimate for negotiated procurements. Activities must provide thedates for all of these items, via the chain of command, to CNO (N4) within 60 days ofnotification of approval to conduct a cost comparison. The CNO (N4) will assign acontrol number that activities must cite in all correspondence concerning each study.


C-2

(2) Quarterly, activities will provide their chain of command an update ofchanges to the approved milestone dates. Activities must justify any schedule slippage.

(3) Activities must separately request cancellation or deferment of announcedstudies in writing to CNO (N4) via their chain of command.

b. Activity Solicitation Report

(1) Activities will submit an Activity Solicitation Report within 10 working days of the date of solicitation issuance to CNO (N4) with information copies to the chain ofcommand. The subject line of this report will identify function title, function code, andNavy control number. For ease of understanding by all addressees, the report shouldlist the title of the reported element followed by the required information (e.g.,” DateSolicitation Issued: 01011999”).

(2) Activities will report information in the format and sequence shown below:

(a) Date PWS completed: (mmddyyyy). Date the PWS is affirmed as acontractible document by the contracting office.

(b) Actual Solicitation Date: (mmddyyyy). Date the solicitation is issued bycontracting officer.

(c) Solicitation Type Code: Type of solicitation used to obtain bid or offers:

B - Best ValueN - NegotiatedS - Sealed Bid

(d) Solicitation Kind Code: Indicate whether the competition for thecontract has been limited to a specific class of bidders. Furnish the followinginformation with appropriate codes.

A - Restrict to Small Business B - Small Business Administration 8(a) set aside

C - Javits-Wagner-O’Day Act (JWOD) (Title 41 U.S.C. Sections 46-48c,reference (o))

D - Other mandatory sources U - Unrestricted W - Unrestricted after initial restriction


C-3

(e) Number of personnel authorized at the activity to perform the workdescribed in the PWS when the solicitation is issued. This number refines the initialassigned estimate reported in the review process prior to study announcement. Theterm "authorized" refers to funded authorized military and civilian positions and not on-board counts.

Current Number of Authorized Civilians: (not MEO)Current Number of Authorized Military: (not MEO)

(f) Number of actual workyears it has taken to perform the work describedby the PWS during the 12 months prior to issuance of the solicitation. Militaryworkyears include assigned, borrowed, diverted, and detailed personnel. Round downless than one half year of effort. Round up one half year or more effort. Do not includecontractor requirements. These workyear numbers establish the baseline fordetermining the personnel savings identified by the management study.

Baseline Workyears, Civilian:Baseline Workyears, Military:

c. Activity Tentative Decision Summary Report

This response reports the tentative result of the cost comparison and will be submittedwithin 3 working days of the initial decision announcement. This requirement allowsCNO (N4) to prepare required Congressional notifications. To expedite reporting,claimants have authority to provide their activity's CAMIS data via the following reportsto CNO (N4) either in writing or electronically, using e-mail, fax, or Navy message.Subject line of this response will identify function title, function code, and Navy controlnumber. Provide a response for each line item; if "not applicable" is appropriate, enter"N/A." For ease of understanding by all addressees, the response should list the title ofthe reported element followed by the required information (e.g., “a. Decision Code: I.”).

(1) If a small business 8(a) solicitation does not result in any bids/offers, reviewthe solicitation and restructure or reissue it on an unrestricted basis. If a solicitationdoes not elicit any bids or offers, do not report any information concerning the MEO andthe cost of the Government's bid. Activities must submit a response noting a change inthe "solicitation kind code" of the preceding solicitation response to "W - Unrestrictedafter initial solicitation." No further report is required until the unrestricted solicitationresults in a tentative decision.


C-4

(2) Report the following information in the format shown below:

(a) Decision Code: I - In-houseC - ContractS - ISSA

(b) Rationale Code: C - CostN - No Satisfactory Commercial SourceO - Other

(c) Cost Comparison/Initial Decision Date: (mmddyyyy). This is the date ofinitial announced decision. The basis for the initial decision is the apparent low bid/offerand is subject to pre-award surveys and resolution of all appeals and protests.

(d) Number of bids or offers received: This is the number of commercialbids or proposals received by the contracting officer in response to solicitation. (Enter"N/A" if no bids/offers received.)

(e) Number of civilian positions required to perform MEO:

(f) Number of positions required for contract administration used incomputing costs of line 8 of Cost Comparison Form (CCF):

(g) Disposition of civilian positions identified in MEO if contract awardoccurs: (If tentative result favors in-house performance, enter "N/A.")

(1) Estimated number of permanent employees reassigned to equivalentgrade positions:

(2) Estimated number of permanent employees changed to lower gradepositions:

(3) Estimated number of employees taking early retirement:

(4) Estimated number of employees taking normal retirement:

(5) Estimated number of permanent employees separated:

(6) Estimated number of temporary employees separated:

(7) Estimated number of employees entitled to severance pay:


C-5

(8) Estimated total dollar amount of severance entitlements:

(9) Estimated number of employees that will be hired by the by thecontractor or ISSA provider:

NOTE: Do not include anticipated adjustments resulting from reduction in force (RIF)bumping and retreating. The sum of lines (1) through (6) above should not exceed thenumber of positions in the original organization.

NOTE: Lines (h) through (l) are totals over all performances period.

(h) Government (MEO) costs: (from line 6 of CCF)

(i) Original cost of function: Estimated total cost of the function before thedevelopment of the MEO, shown in thousands of dollars, rounded to the nearestthousand. Since most organizations are labor intensive, an adequate estimate for thispurpose can be developed by adding the cost of the difference in number of personnelbetween the MEO and the pre-MEO organization to line h, above. Use a more detailedestimate if it is available--In either case use the more accurate estimate.

(j) Bid/offer costs: (from line 7 of CCF)

(k) Cost incurred by contracting: Contract administration and other costs ofcontracting (subtract CCF line 7 from line 13)

(l) Minimum cost differential: (from line 14 of CCF)

(m) Name of company submitting low bid:

(n) Location of company submitting low bid:

(o) Economic Impact Statement: Prepare an examination of the potentialeconomic impact of the performance of the function by the private sector if thereduction-in-force involves 75 or more activity civilian personnel. The statement willaddress DoD employees affected by such a change in performance and must assessthe impact to the local economy and government.

(p) Impact upon military mission: If none, so state.

(q) "I certify that this cost comparison is based on the most efficientorganization. /s/ Commanding Officer"


C-6

(r) Activity point of contact: Name and telephone number.

d. Activity Final Decision Summary Report

(1) Activities will submit this response reporting the final decision of the costcomparison within 3 working days after completion of the administrative appeal period,pre-award survey, and any other determination affecting final outcome of the decision.To expedite reporting, claimants have authority to provide their activity's CAMIS data viathe following reports to CNO (N4) either in writing or electronically, using e-mail, fax, orNavy message. Subject line of response will identify function title, function code, andNavy control number. Provide a response for each line item. For ease ofunderstanding by all addressees, the response should list the title of the reportedelement followed by the required information (e.g., “a. Decision Code: I.”). If "notapplicable" is appropriate, enter "N/A." Report the following information in the formatshown below:

(a) Decision Code: I - In-houseC - ContractS - ISSA

(b) Rationale Code: C - CostN - No Satisfactory Commercial SourceO - Other

(c) First Performance Period. Length of time expressed in months coveredby the first period of performance used in the cost comparison. Do not include anyoption periods.

(d) Cost Comparison Period. Total period of performance used in the costcomparison expressed in months.

(e) Contract, MEO, or ISSA Start Date: (mmddyyyy). The planned date

(f) For contract decisions, indicate disposition of civilian positionsidentified in the MEO only if numbers vary from those reported in tentative decisionsummary response:


(2) Estimated number of permanent employees changed to lower grade


C-7

positions:(3) Estimated number of employees taking early retirement:







NOTE: Do not include anticipated adjustments resulting from reduction in force (RIF)bumping and retreating. The sum of lines (1) through (6) above should not exceed thenumber of positions in the original organization.

NOTE: Lines (g) through (k) are totals over all performance periods.

(g) Government costs: (from line 6 of CCF). Enter only if the appealprocess resulted in change to previously reported data.

(h) Original cost of function: Estimated total cost of the function before thedevelopment of the MEO, shown in thousands of dollars, rounded to the nearestthousand. Since most organizations are labor intensive, an adequate estimate for thispurpose can be developed by adding the cost of the personnel difference between theMEO and the pre-MEO organization to line h, above. If a more detailed estimate isavailable use it--In either case use the more accurate estimate.

(i) Bid/offeror costs: (from line 7 of CCF). Enter only if the appeal processresulted in a change to previously reported data.

(j) Costs incurred by contracting: Contract administration and other costsof contracting (subtract line 7 from line 13 of CCF). Enter only if the appeal processresulted in a change to previously reported data.


C-8

(k) Minimum cost differential: (from line 14 of CCF). Enter only if appealprocess resulted in a change to previously reported data.

(l) Name of company submitting low bid: (If different than previouslyreported)

(m) Location of company submitting low bid: (If different than previouslyreported).

(n) Indicate contractor size:

S - Small or disadvantaged businessL - Large business

(o) Administrative Appeal:

(1) Were administrative appeals filed?

Y - YesN - No

(2) Who filed the appeal?

I - In-houseC - ContractorB - Both

(3) Result - Did appeal reverse initial decision? (Explain if both appeal.)

Y - YesP - Still in progressN - No

(p) General Accounting Office (GAO) protest:

(1) Was protest to GAO filed?

Y - YesN - No


C-9

(2) Who filed the protest?

I - In-houseC - ContractorB – Both

(3) Was protest upheld? (Explain if both protest)


(q) Arbitration:

(1) Was arbitration requested?

Y - YesN - No

(2) Was the case found arbitrable? (Provide brief explanation)


(r) Contract Administration Personnel: Report the actual number of personnel who administer the contract.

(s) Contract Type: Enter only if decision is to award to a contractor. Enterone of the following codes for the first character to classify the contract as eitherpredominately fixed price or predominately cost reimbursable:

A Predominately Firm Fixed PriceD Predominately Cost Reimbursable

Enter one of the following codes for the second character:

I Indefinite Delivery/Indefinite QuantityO Other


C-10

(t) MEO Workyears: Enter the number of annual workyears it takes toperform the work described in the PWS after the MEO study has been conducted. Thisentry must equal the number of annual workyears in the in-house bid.

(2) The CNO (N4) will authorize cancellation of the solicitation andcontinued in-house performance, contract award in the case of the sealed bidsolicitation, and commencement of contract performance in the case of a negotiatedsolicitation by return response after issuing all the appropriate congressionalannouncements. No additional documentation or approvals are required if the actioninvolves fewer than 75 civilian employees. If the action involves the separation of 75 ormore civilian employees, activities will forward the Fact and Justification Sheet forActions Requiring ASN(M&RA) Approval directly to the applicable approving authorityas outlined in SECNAVINST 12351.5E (NOTAL) with a simultaneous copy to CNO (N4).Since, in most CA conversions, contract employees will continue to perform theconverted function in the same geographic area, the economic impact upon thegeographic area will usually be minimal. If activities cannot calculate precise numbersfor this report, they should submit an estimate.

e. Activity Post Conversion Report

(1) If the function is contracted, submit this report and a copy of the completedcost comparison format, revised to show any changes resulting from appeal decision,not later than 90 days after contract start date to CNO (N4) with information copies tothe chain of command. Subject line of the report will identify function title, functioncode, and Navy control number. For ease of understanding by all addressees, thereport must list the title of the reported element followed by the required information(e.g., Contract Start Date: mmddyyyy).

(2) Activities will report the following information in the format shown below:

(a) Contract Start Date: (mmddyyyy). Actual date the contractor begins fulloperation of the function/functions under the contract.

(b) Permanent Employees Transferred to Equal Positions. Number ofpermanent employees reassigned to positions of equal grade effective through the startdate of the contract.

(c) Permanent Employees Transferred to Lower Positions. Number ofpermanent employees reassigned to lower grade positions effective through the startdate of the contract.


C-11

(d) Employees Taking Early Retirement. Number of employees receivingoffer and who have accepted early retirement effective through the start date of thecontract.

(e) Employees Taking Normal Retirement. Number of employees who takenormal retirement effective through the start date of the contract.

(f) Permanent Employees Separated. Number of permanent employeesseparated from Federal employment effective through the start date of the contract.

(g) Temporary Employees Separated. Number of temporary employeesseparated from Federal employment effective through the start date of the contract.

(h) Employees Paid Severance. Number of employees entitled toseverance pay upon their separation from Federal employment effective through thestart date of the contract.

(i) Total Amount of Severance Pay Entitlement ($000). Estimated totalpayable amount of severance for all affected employees, shown in thousands of dollars,after their separation from Federal employment.

(j) Number of Employees Hired by the Contractor. Number of DoD civilianemployees (full-time or otherwise) hired by the contractor.

(k) Staff Workyears Expended. Estimated number of activity staff hoursexpended on the cost comparison. These staff hours will include direct and indirecttime expended from the time of study announcement to the final decision.

(l) Estimated Cost of Conducting the Cost Comparison. Estimated cost ofthe total staff hours identified above and non-labor (e.g., travel, reproduction costs, etc.)associated with conducting the cost comparison. This number should include the costof any contract consultants funded directly by the claimant. The cost of contractconsultants funded through the Strategic Sourcing Office (SSO) from the CNO (N4)budget will be accounted for separately. Show this information as:

(1) Cost of staff hours:

(2) Non-labor costs (travel, reproduction, etc.):

(3) Other consultant costs (identify consultant):


C-12

(m) Comments. Present comments as required to explain relevantsituations that affected the conduct of the study.

f. The MEO Implementation Report

(1) If the function remains in-house, the fourth report in this series will besubmitted when the MEO is implemented, but not later than 180 days after continued in-house performance is authorized. This report, along with a copy of the completed costcomparison form, revised to show any changes resulting from appeal decisions, will besent to CNO (N4) with information copies to the chain of command. Subject line ofreport will identify function title, function code, and Navy control number. For ease ofunderstanding by all addressees, the report should list the title of the reported elementfollowed by the required information (e.g., MEO Implementation Date mmddyyyy).

(2) Activities will report the following information in the format shown below:

(a) The MEO Implementation Date: (mmddyyyy)

(b) Staff Hours Expended: Estimated number of activity staff hoursexpended while completing the cost comparison. These staff hours will include directand indirect hours expended from the time of study announcement to the final decision.

(c) Estimated Cost of Conducting the Cost Comparison: Estimated cost ofthe total staff hours identified above and non-labor (e.g. travel, reproduction costs, etc.)associated with the conducting the cost comparison. This number should include thecost of any contract consultants funded directly by the claimant. The cost of contractconsultants funded through SSO from the CNO (N4) budget will be accounted forseparately. Show this information as:

(1) Cost of staff hours:

(2) Non-labor costs:

(3) Consultant costs (identify consultant):

(d) Comments. Present comments as required explaining relevantsituations that affected the conduct of the study.


C-13

g. Activity Annual Update Report

(1) This report will be submitted within 30 calendar days after the first period ofperformance, and annually thereafter, through the option periods stated in the costcomparison to update costs. Submit this report to CNO (N4) with information copies tothe chain of command. This report is not required after execution of all periods ofperformance. The subject line of the report will identify function title, function code, andNavy control number. For ease of understanding by all addressees, the report will listthe title of the reported element followed by the required information.

(2) Activities will report the following information (Show costs in thousands ofdollars, rounded to the nearest thousand.):

(a) Contract, ISSA, and In-house Bid--First/Second/Third/Fourth/FifthPerformance Period. Enter the in-house FTE workyears planned at the time of costcomparison for the performance period and the bid contract or ISSA price (from line 7 ofthe CCF).

(b) Actual Contract, ISSA, or In-house Costs--First/Second/Third/Fourth/Fifth Performance Period. For studies resulting in in-house performance; Enter theactual number of expended FTEs during the period of performance and round the figureto the nearest whole number For studies resulting in conversion to contract or ISSAperformance, enter the actual contract or ISSA price for the performance period.

(c) Performer Change. Enter one of the following alphabetic codes toindicate whether the provider for the second, third, fourth or fifth performance period haschanged from the original contractor.

Y - Yes, the performer has changed.N - No, the performer has not changed.

(d) New Contractor Size. Enter one of the following alphabetic codes:

L - New Contractor is Large BusinessS - New contractor is Small/Disadvantaged Business

(e) Reason for Change. Enter one of the following alphabetic codes:

C - Contract workload consolidated with other existing contract workload.D - The new contractor took over because the original contractordefaulted.


C-14

I - Performance returned to in-house operation because the originalcontractor defaulted within 12 months of the start date and the in-house bidwas the next lowest bid.N - The new contractor replaced the original contractor because theGovernment opted not to renew the contract's option years.R - The function returned to temporary in-house operation pendingresolicitation due to contractor default.S - An ISSA provider assumed the workload.T - The function was returned to in-house performance permanently after 12months from the start dateU - Contract workload consolidated into a larger (umbrella) costcomparison.X - Other--The function was eliminated because of base closure,realignment, budget reduction, or other change in requirements.

(f) Contract Administration Staffing. Enter the annual estimated work hoursexpended by contract administration personnel to administer the contract. (N/A iffunction performed in-house)

(g) Post-MEO Performance Review Date. Enter the date when the MEOunderwent formal review and inspection. (N/A if function under contract)

Summary of Activity Reports Required for Full Cost Comparison and SimplifiedCost ComparisonREPORT TYPE & DISPOSITION WHEN REQUIREDa1. Establishment of POA&MTarget Dates

Report to CNO (N4) Sixty days after announcement

a2. Quarterly Update of POA&MDates

Report CNO (N4) Quarterly (For in-process studiesonly)

b. Activity Solicitation Report Report to CNO (N4) Ten working days after issuance ofsolicitation

c. Activity Tentative DecisionSummary Report

Report to CNO (N4) Three working days afterannouncement of cost comparisonresults

d. Activity Final DecisionSummary Report

Report to CNO (N4) Three working days aftercompletion of appeal period, pre-award survey, etc.

e. Activity Post ConversionReport

Report to CNO (N4 Ninety days after authorization toperform by contract

f. The MEO ImplementationReport

Report to CNO (N4 Upon MEO implementation but nolater than 180 days afterauthorization of continued in-houseoperation

g. Activity Annual Update Report Report to CNO (N4) Annually within 30 calendar days ofend of each performance period


C-15

2. Commercial Activities Reporting--Direct Conversion

a. Activity Solicitation Report. Use format at section 1. Commercial ActivitiesReporting--Full Cost Comparison and Simplified Cost Comparison, 1b.

b. Activity Final Decision Summary Report

(1) An Activity Final Decision Summary Report will be submitted within threeworking days after completion of the pre-award survey and any other determinationsaffecting final outcome of the decision to CNO (N4). To expedite reporting, claimantshave authority to provide their activity's CAMIS data via the following reports to CNO(N4) either in writing or electronically, using e-mail, fax, or Navy message. Subject lineof the response will identify function title, function code, and Navy control number.Provide a response for each line item. For ease of understanding by all addresses, theresponse should list the title of the reported element followed by the requiredinformation (e.g., “b. First Performance Period: 12”). If "not applicable" is appropriate,enter "N/A."

(2) Report the following information in the format shown below:

(a) Number of Bids Received: Number of commercial bids or proposalsreceived by the contracting officer in response to solicitation.

(b) First Performance Period: Length of time expressed in months, coveredby the initial contract period used in the cost comparison. Do not include any optionperiods.

(c) Cost Comparison Period: Total period of operation covered by the costcomparison expressed in months.

(d) Contract, ISSA, or MEO Start Date: (mmddyyyy). Planned date.

(e) For contract decisions, indicate disposition of civilian positionsidentified in the MEO only if numbers vary from those reported in tentative decisionsummary response:



C-16

(2) Estimated number of permanent employees changed to lower gradepositions:

(3) Estimated number of employees taking early retirement:







NOTE: Do not include adjustments resulting from RIF bumping and retreating. Thesum of lines (1), (2) and (3) above should not exceed the number of positions in theoriginal organization.

NOTE: Lines (f) through (h) are totals over all performances period.

(f) Original cost of function: Estimated total cost of the function before thedirect conversion decision, shown in thousands of dollars, rounded to the nearestthousand. Since most of the cost of small organizations are labor, an adequateestimate for this purpose can be attained by developing the cost of the positionseliminated. If a more detailed estimate is available use it--In either case use the moreaccurate estimate.

(g) Bid/Offeror costs:

(h) Costs incurred by contracting:

(i) Name of company submitting low bid:

(j) Location of company submitting low bid:


C-17

(k) Indicate contractor size:

S - Small or small disadvantaged businessL - Large business

(l) The GAO Protest:

(1) Was protest to GAO filed?

Y - YesN - No

(2) Who filed the protest?

B - BothC - ContractorI - In-houseS - ISSA

(3) Was the protest upheld?

Y - YesP - Still in progress (Provide brief explanation)N - No

(m) Arbitration:

(1) Was arbitration requested?

Y - YesN - No

(2) Was case found arbitrable?

Y - YesP - Still in progress (Provide brief explanation)N - No


C-18

(n) Contract Type: Enter one of the following codes for the first character toclassify the contract as either predominately fixed price or predominately costreimbursable:

A Predominately Firm Fixed PriceD Predominately Cost Reimbursable

Enter one of the following codes for the second character:

I Indefinite Delivery/Indefinite QuantityO Other

c. Activity Post Conversion Report

(1) An Activity Post Conversion Report will be submitted 90 days after contractstart date to CNO (N4). The subject line of this report will identify function title, functioncode, and Navy control number if previously assigned by CNO (N4). For ease ofunderstanding by all addressees, the report should list the title of the reported elementfollowed by the required information (e.g., “f. Contractor Change: N").

(2) Activities will report information in the following sequence:

(a) Actual Contract or ISSA Cost—First/Second/Third/Fourth/Fifth Performance Period. Actual contractor or ISSA cost for the performance period,shown in thousands of dollars, rounded to the nearest thousand.

(b) Performer Change. Enter one of the following alpha designators toindicate whether the contractor for the second or third performance period has changedfrom the original contractor:

N - No, the performer has not changed.Y - Yes, the performer has changed.

(c) New Contractor Size. Enter N/A if f. above is “N.” Otherwise, enter oneof the following alpha designators to indicate the size of the new contractor. (If h. belowis “I” or “R,” no entry is required):

L - The new contractor is large business.S - The new contractor is small or small disadvantaged business.


C-19

(d) Reason for Change. Enter N/A if f. above is “N.” Otherwise, enter oneof the following designators, followed by the last four digits of the fiscal year (FY) inwhich the change occurred (e.g., “h. Reason for Change: C1998):

C - Consolidation of contract workload with other existing contract workload.D - The new contractor took over because the original contractor defaulted.I - The function was returned to in-house performance because the originalcontractor defaulted within 12 months of the start date and the in-house bidwas the next lowest.N - The new contractor replaced the original contractor because theGovernment opted not to renew the contract in option years.R - Return of function to in-house performance temporarily pendingresolicitation because of contract default.S - Assumption of workload by ISSA.T - The function was returned to in-house performance permanently after12 months from the start date.U - Consolidation of contract workload into a larger (umbrella) costcomparison.X - Other-- The function was eliminated because of base closure,realignment, budget reduction or other change in requirements.

(e) Contract Administration Staffing. The actual number of personnel whoadminister the contract.

d. Activity Annual Update Report. Use format at section 1. Commercial ActivitiesReporting--Full Cost Comparison and Simplified Cost Comparison, 1g.

Summary of Activity Reports Required for Direct ConversionREPORT TYPE & DISPOSITION WHEN REQUIREDa. Activity Solicitation Report Report to CNO (N4) Ten working days after issuance

of solicitationb. Activity Final DecisionSummary Report

Report to CNO (N4 Three working days aftercompletion of pre-award survey

c. Activity Post ConversionReport

Report to CNO (N4) Ninety days after contract start

d. Activity Annual Update Report Report to CNO (N4) Annually within 30 calendar daysof end of each period ofperformance


D-1

Appendix D--Public Affairs Guidance

1. General Information. This appendix provides public affairs guidance relating to theCommercial Activities (CA) Program. Because of the CA Program's potential effect onan activity's workforce and upon the surrounding community, it is essential there beclose coordination between affected installation commanders, activity commanders,local CA Program managers, and area chain of command Public Affairs Officers (PAO).

a. The Deputy Chief of Naval Operations for Logistics coordinates and directsoverall policy regarding the Navy CA Program.

b. The CNO (N4) notifies activities via message of functions approved for costcomparison. This notification is provided to each affected installation, its majorclaimant, the chain of command, area CA coordinators, appropriate area public affairsoffices and the Chief of Information (CHINFO). The message authorizes localannouncement of the CAs to be studied using the statements contained in the followingparagraphs, with appropriate local information inserted.

2. Congressional Announcements and Notifications. The CNO (N4) prepares theannouncement to Congress of CA actions as required by the type of cost comparison.

a. Intention to Study Functions. The CNO (N4) reviews the CA functions nominatedfor cost comparison. If the functions are approved for cost comparison, CNO (N4)prepares a list of functions to be studied, by location, for distribution to members ofCongress by the Office of Legislative Affairs (OLA). The CNO (N4) also prepares lettersto the Speaker of the House and the President of the Senate advising them of theplanned studies.

b. Intention to Contract - Sealed Bids. The contract award decision will be made atthe conclusion of the cost comparison, a process that includes bid opening,determination of the apparent low bidder, completion of any appeal process, and apre-award survey, if required. If a contract award is indicated, CNO (N4) coordinatescongressional notification of the Navy's intention to award a contract. Upon notification,CNO (N4) will authorize contract award.

c. Intention to Contract--Negotiated Procurements. If after examining all proposalsthere exists an apparent successful offeror, a tentative contract award is madecontingent upon the outcome of the appeal process. If contract award persists aftercompletion of the appeal process, CNO (N4) coordinates congressional notification ofthe Navy's intention to authorize performance by contract. The CNO (N4) will advise


D-2

the activity, by message, of the congressional notification and will authorizecommencement of the contract.

d. Decision to Retain Function In-House. No congressional notification is requiredwhen the cost comparison determines in-house retention of function.

3. Local Announcements. Public announcement will be made to all affected parties,including tenants, local activities, and employee groups and unions upon a decision toconduct a cost comparison, award a contract, or retain functions in-house. While eachmessage must be tailored to the specific situation and location, certain aspects ofnotification are common and may be disseminated by a common template ofinformation. Example media statements are at the end of this appendix.

(Note: Public announcements beyond a letter to employees and employee organizationrepresentatives may be deferred to concerned members of Congress. After Congresshas been notified by the Office of Legislative Affairs, the Office of the AssistantSecretary of Defense (Public Affairs) will make a media advisory announcement.)

4. Inquiries. The following questions and answers may be used to respond to CAquestions generated by local interest and involvement. Some of the inquiries may crosschain of command and local activity lines of responsibility, requiring compilation ofinformation from a variety of affected installations or tenant commands. Communicationbetween area PAOs is essential to ensure a smooth flow of information and present acoordinated responses to legitimate local concerns.

Q1: Why are these functions being considered for contract performance?

A1: It has been the policy of each Presidential Administration since 1955 torequire all Federal departments and agencies to rely on the private enterprisesystem to the maximum extent possible to provide needed products andservices. The Commercial Activities (CA) Program, which determines the mosteconomical way of providing needed products and services, is consistent withthis policy.

Q2: Will contracting have any influence on our military readiness since functionsmay be performed by civilian contractors instead of military personnel?

A2: These functions have been reviewed and it has been determined thatcontract performance will not affect readiness.Q3: What other installations could be subject to contracting?


D-3

A3: Most Navy installations in the United States, its territories and possessions,and the Commonwealth of Puerto Rico have functions that could be included inthe CA Program.

Q4: Will contractors offer employment for civilians displaced as a result ofconversion?

A4: Contractors will give Federal employees displaced as a result of aconversion their “Right of First Refusal,” as required by law, for employmentopportunities in positions for which they are qualified.

Q5: What do these studies involve?

A5: Studies involve the identification of the cost of Government performanceand the solicitation of bids/offers from the private sector for functions understudy. A Performance Work Statement (PWS), specifying the requirements to bestudied, is developed for inclusion in the solicitation. The PWS forms the basisfor a Most Efficient Organization (MEO) developed to perform the function in-house. The MEO is used to determine costs for the Government estimate usedin the cost comparison. If the cost comparison reveals the cost of contractualperformance is less than the cost of Government performance by a factor equalto, or greater than, 10 percent of the Government's personnel costs, the functionwill be contracted.

Q6: When will the studies start?

A6: Studies for most functions will begin shortly after public announcement.

Q7: Who will conduct studies?

A7: Studies will be conducted primarily by Navy personnel at each installation. Expertconsultants may be used to assist with the study.

Q8: Will an environmental impact analysis be conducted prior to conversion?

A8: The Navy will comply with all current regulations concerning environmental impactrequirements.


D-4

Q9: Will employees and unions at various activities be notified of the studies?

A9: Yes.

Q10: Is there a specific cost savings goal for this project?

A10: No. There are no preconceived goals established since each action mustbe handled on an individual basis. 5. Other Media Inquires. Refer inquiries beyond the scope of this guidance to the Chief of Information (CHINFO) Newsdesk. Refer Navy Public Affairs policy questions to theCHINFO Plans, Policy, and Community Relations Office. Refer questions regarding CAProgram policy to the Chief of Naval Operations (N4). 6. Example text for media news releases:

a. Example text body for media advisory for announcement of cost comparison

City and State - The Navy announced its initiation of detailed studies to determinethe feasibility and economy of converting various support functions to contractorperformance at local area identify activities at identify naval installations. The study isunder the cognizance of Commander, identify naval installation. Currently, there areapproximately provide numbers military and civilian personnel affected by the study.Decisions to convert functions to contract will be made only if the studies indicate thatsignificant savings of tax dollars can be achieved. If such decisions are made,Congress and the public will be notified of the study. Any employees affected willreceive assistance from Federal placement programs including relocations, in obtainingtransfer rights to other positions in the Department of Defense or to other Federalagencies, at government expense, if necessary.

b. Example text body for announcement of cost comparison to employees andunions

This letter is to advise you that a cost comparison of the (name) function will beconducted to determine if it is more cost effective to retain the function in-house or toconvert it to contract. The function is being considered as part of a Navy-wide review ofcommercial activities being undertaken in response to the direction of Office andManagement and Budget (OMB) Circular A-76, Performance of Commercial Activities.

The Circular requires periodic review of each commercial activity to determine ifcontinued performance by Government personnel is required for reasons of National


D-5

Defense. If not, the Circular prescribes that the function undergo a firm bid/offer costcomparison to determine if continued performance by Government personnel iseconomical. Both the Government and contract cost figures used in the costcomparison are based on the same scope of work and the same performance standardto assure a fair comparison and continued high level of performance. If the costs ofcontracting are lower than the costs of continued Government performance by a factorequal to or greater than 10 percent of the Government’s personnel costs, the function isconverted to contract.

A task group has been formed to coordinate the cost comparison. The task groupchairperson is state name, command code, telephone number. As soon as themilestones have been established by the task group, you will be advised. APerformance Work Statement (PWS) will be developed outlining the work resultsrequired. From that PWS, the Government’s Most Efficient Organization (MEO) for theperformance of the function will be determined. The cost of the MEO will be computedto estimate the costs of continued performance by Government personnel. Yoursuggestions on the preparation of the PWS and MEO are solicited.

In an effort to minimize the personal hardships on the event of conversion, everyeffort will be made to assist the affected employees in obtaining Federal or otheremployment. Affected employees will be eligible for placement under the DoD PriorityPlacement Program. In addition, in the event of a decision to convert to contract, thecontract will include a provision, consistent with Government post-employment conflictof interest standards, that the contractor will give affected employees their right of firstrefusal for employment openings on the contract in positions for which they arequalified.

c. Example text body for direct conversion of 10 or fewer FTE

City and State - The Navy initiated business case analyses to determine thefeasibility and economy of converting various support functions to contractorperformance at local area identify activities at identify naval installations. Thesolicitation is under the cognizance of Commander, identify naval installation. Currently,there are approximately provide numbers military and civilian personnel potentiallyaffected. Decisions to directly convert functions to contract will be made after adetermination that fair and reasonable prices/service values can be obtained. If suchdecisions are made, Congress and the public will be notified of the action. Any civilianemployees affected will receive assistance from Federal placement programs, includingrelocations, in obtaining transfer rights to other positions in the Department of Defenseor to other Federal agencies, at Government expense, if necessary. Additionally,potential contractors will be notified of requirements to offer to affected and qualified


D-6

employees their right of first refusal for jobs that may be created in the event of award ofcontract.

d. Example text body for announcement to employees and union of directconversion

This letter is to advise you that a business case analysis of the (name) function willbe conducted to determine if it is more cost effective to retain the function in-house or toconvert it to contract. The function is being considered as part of a Navy-wide review ofcommercial activities being undertaken in response to the direction of Office andManagement and Budget (OMB) Circular A-76, Performance of Commercial Activities.

The Circular requires that each commercial activity be reviewed periodically todetermine if continued performance by Government personnel is required for reasons ofNational Defense. If not, the Circular prescribes that the function undergo a feasibilitystudy to determine if continued performance by Government personnel is economical.If available market /commercial prices are lower than the costs of continuedGovernment performance of the Government’s personnel costs, the function isconverted to contract.

A task group has been formed to coordinate the cost comparison. The task groupchairperson is state name, command code, telephone number. When the costcomparison is completed by the task group, you will be advised of the outcome.

In an effort to minimize the personal hardships in the event of conversion, everyeffort will be made to assist the affected employees in obtaining Federal or otheremployment. Affected employees will be eligible for placement under the DoD PriorityPlacement Program. In the event of a decision to convert to contract, the contract willinclude a provision, consistent with Government post-employment conflict of intereststandards, that the contractor will give affected employees their right of first refusal foremployment openings on the contract in positions for which they are qualified.

e. Example text body for announcement of conversion to contractor operation

The Navy announced today its decision to convert various support functions(or list function(s)) at (activity(ies)) in the (location(s)) under thecognizance of (command or activity) to contractor performance. A contractwas awarded to (name of contractor). There were (number) military personneland (number) Navy civilian personnel performing the functions before thedecision to convert to contract.


D-7

The decision to convert the functions to contract was made after a detailedstudy indicated that significant savings of tax dollars could be achieved.Congress and the public have been notified according to normal procedures.The civilian employees affected are receiving assistance from Federalplacement programs in obtaining transfer or reassignment to other positionsin the Department of Defense or to other Federal agencies. Civilianemployees affected also have the right of first refusal for employmentopenings on the contract in positions for which they are qualified.

f. Example text body for announcement of retention of in-house operation

The Navy announced today that it will retain in-house various support (orlist functions) at (activity(ies)) in the (location(s)) under the cognizanceof (command or activity). Currently there are (number) military personneland (number) Navy civilian personnel performing the functions. As a resultof efficiencies identified in this study the Navy expects that (number) ofthese positions will be eliminated. The civilian employees affected by thisdecision are receiving assistance from Federal placement programs inobtaining transfer or reassignment to other positions in the Department ofDefense or to other Federal agencies. The decision to retain the performanceof the functions in the government was made after a detailed study indicatedit was more cost effective to continue to perform the functions byGovernmental personnel than by contract.


E-1

Appendix E--Principal Statutes Governing CA

1. Title 10 U.S. Code (U.S.C.) (various sections--2461-2471).

a. Section 2461. This section requires congressional notification on the decision tostudy a function performed by DoD civilian employees. It requires a detailed summaryof performance costs that demonstrate contractor performance will result in cost savingsto the Government over the life of the contract. It requires certification of the MostEfficient Organization (MEO) and requires congressional reporting regarding:

(1) The economic effect on employees if the function involves more than 75employees

(2) The effect of contracting on the military mission of the function and theamount of accepted bid and cost of government performance together with conversioncosts

(3) Requiring an annual report to Congress (commonly known as the annual CAinventory)

(4) Waiver for the congressional announcement and notification requirementsfor functions performed by 50 or fewer DoD civilian employees or for preferentialprocurement

(5) Prohibiting conversion of a function to contract to circumvent a civilianpersonnel ceiling

(6) Certification that all analysis is available for examination

b. Section 2462. Requires DoD to procure supplies or services from the privatesector where such are available at lower cost than that which DoD can itself provide.Requires the Secretary of Defense (SECDEF) to ensure costs considered are fair andreasonable and reflect all costs such as quality assurance, technical monitoring, liabilityinsurance, employee retirement and disability benefits and all other overhead costs.

c. Section 2463. Requires the collection and retention of cost information withrespect to converting the performance of a service or function to contractor performancefor the term of the contract (not to exceed 5 years) and for conversion from contractor toin-house performance.


E-2

d. Section 2464. Establishes core logistics capability and limitations on contractingthese functions.

e. Section 2465. Prohibits contracting of firefighting or security-guard functions.

f. Section 2466. Limits and sets percentages for contract performance of depot-level materiel maintenance.

g. Section 2467. Requires the inclusion of retirement costs in government costcomparisons. Requires at least monthly consultation with employees and considerationof their views in developing Performance Work Statement (PWS), management studyefforts, and other relevant matters. Establishes that consultation with labor organizationrepresentatives (as defined by Title 5 U.S.C. 711) satisfies the consultation requirement.

h. Section 2468. Establishes base commander's authority including the requirementto prepare an annual inventory, determine which CA’s will be reviewed under OMBCircular A-76 and to conduct solicitations according to the A-76 process. Limitscommanders' authority as prescribed by SECDEF regulations. Requires commandersto provide employment assistance to displaced employees. Defines a militaryinstallation.

i. Section 2469. Defines limitations on application of OMB Circular A-76 to depot-level activities.

j. Section 2470. Establishes authority for DoD depot-level activities to compete formaintenance and repair workloads of other Federal agencies.

k. Section 2471. Establishes authorities and limits of leasing excess depot-levelequipment and facilities.

2. Title 16 U.S.C. 670a, Conservation/Cooperative Plan for Wildlife Conservation andRehabilitation. With regard to the implementation and enforcement of cooperative plansagreed to under subsection (a) of this section (1) neither Office of Management andBudget Circular A-76 nor any successor circular thereto applies to the procurement ofservices that are necessary for that implementation and enforcement; and (2) priorityshall be given to the entering into of contracts for the procurement of suchimplementation and enforcement services with Federal and State agencies havingresponsibility for the conservation or management of fish or wildlife. This statute isimplemented through DODI 4715.3, Environmental Conservation Program, 3 May 1996(NOTAL).


E-3

3. Public Law (PL) 103-226, Federal Workforce Restructuring Act (FWRA) of 1994.The FWRA requires agencies to reduce full-time equivalent positions during fiscal years1994 through 1999. The Act authorizes agencies to offer employees incentives to retireor leave Federal employment (e.g., Variable Separation Incentive Payment(VSIP)/Variable Early Retirement Authority (VERA)).

4. Annually, the Defense Appropriations Act contains a provision that prohibitsspending any funds to convert to contractor performance any function of more than 10civilian employees without completion of an MEO and congressional announcement. Asecond general provision prohibits spending funds for studies that exceed 24 months forsingle function studies and 48 months for multi-function studies. This provision placesan absolute time limit on studies. For FY99 the Appropriations Act includes thefollowing citations:

a. Section 8014. None of the funds appropriated by this Act shall be available toconvert to contractor performance an activity or function of the Department of Defensethat, on or after the date of enactment of this Act, is performed by more than 10Department of Defense civilian employees until a most efficient and cost-effectiveorganization analysis is completed on such activity or function and certification of theanalysis is made to the Committees on Appropriations of the House of Representativesand the Senate: Provided, That this section and subsections (a), (b), (c) of 10 U.S.C.2461 shall not apply to a commercial or industrial type function of the Department ofDefense that: (1) is included on the procurement list established pursuant to section 2 ofthe Act of June 25, 1938 (41 U.S.C. 47), popularly referred to as the Javits-Wagner-O'Day Act; (2) is planned to be converted to performance by a qualified nonprofitagency for the blind or by a qualified nonprofit agency for other severely handicappedindividuals in accordance with that Act; or (3) is planned to be converted to performanceby a qualified firm under 51 per centum Native American ownership

b. Section 8026. None of the funds appropriated by this Act shall be available toperform any cost study pursuant to the provisions of OMB Circular A-76 if the studybeing performed exceeds a period of 24 months after initiation of such study withrespect to a single function activity or 48 months after initiation of such study for a multi-function activity.

5. Combining these legal requirements establishes the following policy contained in thebody of this instruction:

a. Functions with 10 or fewer FTE: By Navy policy, these actions are announced toCongress by the Navy as a courtesy and activities should forward requests to CNO (N4)via their major claimants. After the announcement the function can be “directly


E-4

converted” per paragraph 4a above. Cost data must be reported in accordance with therequirements of this instruction.

b. Functions with 11 to 50 FTEs: As stated in paragraph 5a, above, these functionsare announced to Congress as a courtesy. Activities will perform a CA study per OMBCircular A-76 to formulate an MEO and will prepare a cost comparison. Upon reachinga decision to convert a function to contract, the decision must be announced toCongress before the conversion proceeds.

c. Functions of more than 50 FTEs: As in paragraph 5b, above, except that thesefunctions must be announced to Congress as required by Title 10 U.S.C. 2461 beforethe study commences.

6. In summary, although OMB Circular A-76 (NOTAL) provides several alternatives toperforming formal cost comparisons, Navy activities must meet statutory reportingrequirements. Navy policy meets these requirements with the formal cost comparisonprocess as stated in this instruction.


F-1

Appendix F—Brief Summary of the A-76 Decision Process

This appendix presents major decision events required by the law, OMB CircularA-76, Revised Supplemental Handbook (NOTAL), and the Federal AcquisitionRegulation (FAR). Its intent is to briefly summarize the more common actions thatoccur during CA studies.

1. Plan for CA Study:

a. Ten or fewer FTE (Note: This is a management decision and not appealableunder CA administrative appeal procedures.):

(1) Non-preferred source: Activities may begin direct conversion to contractwithout congressional notification if:

(a) The activity commander has attempted to place all affected civilianemployees in a position at their present installation, or within the local area,commensurate with their current skills and pay grades.

(b) All affected civilian employees are retrained for existing or projectedvacancies within the local commuting area.

(2) Preferred source1:

(a) Activities may immediately begin conversion to contract or InterserviceSupport Agreement (ISSA).

b. Eleven to 50 FTE:

(1) The Navy announces this action to Congress as a courtesy.

(2) Activities will conduct a CA study to formulate the MEO and conduct a costcomparison.

c. Fifty-one or more FTE:

(1) The Navy announces this action to Congress as required by law.

1 Preferred sources include National Industries for the Severely Handicapped, National Industries for theBlind, Federal Prison Industries, and 51 percent Native American ownership.


F-2

(2) Activities will conduct a CA study to formulate the MEO and conduct a costcomparison.

2. Develop PWS and QASP

3. Review and Revise PWS and QASP

4. Obtain Higher Level Approval of PWS and QASP

5. Conduct Pre-solicitation Actions (except for Streamlined Cost Comparison)

6. Prepare and Issue Solicitation:

a. Eleven to 65 FTE: Under Streamlined CA procedures, activities may conduct bidsolicitation during 14. Select Best Value Offer if the government’s adjusted total In-House Cost Estimate is greater than the range of adjusted total contract or ISSA costestimates. Alternatively, activities may issue solicitation during 10. Evaluate Proposalsif 4 or more comparable agency contracts or ISSA’s are not available.

b. More than 65 FTE: Activities will conduct formal solicitation as required by theFAR.

7. Develop the Management Plan:

a. Ten or fewer FTE: Activities will base their in-house costs on the currentorganization, which is assumed to be the MEO, and no management plan is required.Activities will calculate labor, material, overhead, and contract support costs inaccordance with the provisions of the OMB Circular A-76, Revised SupplementalHandbook (NOTAL).

b. Eleven or more FTE: Activities will conduct a CA study to formulate the MEO andconduct a cost comparison.

8. Issue and Receive Responses to Solicitation

9. Perform Independent Review


F-3

10. Evaluate Proposals:

a. One to 65 FTE: After receipt of the certified In-House Cost Estimate, thecontracting officer will develop a range of contract cost estimates based on not less thanfour comparable agency service contracts or ISSA’s. Activities should makeadjustments for differences in scope. If four or more contracts or ISSA’s are notavailable, the contracting officer may issue a solicitation for bids and the agency willconduct a cost comparison as provided for in the OMB Circular A-76, RevisedSupplemental Handbook (NOTAL).

b. More than 65 FTE: Activities will conduct a formal Source Selection as requiredby the FAR.

11. Obtain Pre-negotiation Clearance Approval (Not required for one to 65 FTE)

12. Conduct Discussions With Offerors (Not required for one to 65 FTE)

13. Obtain Final Clearance Approval (Not required for one to 65 FTE)

14. Select Best Value Offer:

a. One to 65 FTE: The contracting officer will adjust the range of estimated contractcosts in compliance with the requirements of OMB Circular A-76, Revised SupplementalHandbook’s streamlined cost comparison procedures. The contracting officer will thencompare the Adjusted Total Cost of In-House Performance with the Adjusted Total Costof Contract or ISSA performance.

b. More than 65 FTE: Conduct bid opening procedures as required by the FAR.

15. Make Tentative Decision (Compare Government and Contractor Proposal):

a. If the Government’s adjusted total In-House Cost Estimate is greater than therange of adjusted total contract bid or ISSA cost estimate, the contracting officer will,respectively, announce a tentative decision to award to contractor or enter into an ISSA.

b. Activities will offer Right of First Refusal of Employment to employees adverselyaffected by contract or ISSA award and who are not considered procurement officials.

c. If the government’s adjusted total In-House Cost Estimate is below or within therange of adjusted total contract or ISSA cost estimates, the contracting officer willannounce a tentative decision of award to the In-house organization.


F-4

16. Conduct Administrative Appeal Period. Upon notification of adversely affectedemployees and publication of the tentative decision in the Commerce Business Daily,the activity will initiate its Administrative Appeal period.

17. Make Final Decision:

a. Send Activity Final Decision Report to CNO (N4).

b. If final decision results in contractor operation:

(1) The activity will coordinate with CNO (N4) to make congressionalnotification of intent to contract in accordance with 10 U.S.C. 2461 and the Annual DoDAppropriations Act.

(2) Once the CNO (N4) informs the activity that congressional notification iscomplete the contracting officer awards the contract.

(3) Activity will begin transition to contract operations.

c. If final decision results in in-house operation:

(1) Begin MEO implementation within 30 days of decision.

(2) Conduct Post-MEO Performance Review at the 1-year point.


G-1

Appendix G--The CA Function Nomination Data and Examples

Activities will submit the following information when nominating their functions forcompetition. All nominations should be grouped into the functions and locations whichwill comprise one or more multi-function studies or identified as a single function study.Nomination spreadsheets are available at the DCNO (Logistics) Division’s Web site.

Nomination for Competition• Resource Sponsor Name• Study Name• Activity Name• Unit Identification Code• State• Congressional District• Budget AG/SAG(s) Funding Function• CA Function Code• CA Function Name• Total Military (Also, enter data as shown below in Military Data)• Total Civilian• Total NAF

Military Data• Resource Sponsor Number• Activity Name• UIC• CA Function Code• CA Reason Code• Billet Identification Number• BSC• Billet Title• Officer Designator• Officer grade Code• Enlisted Rating• Enlisted Rate• MRC Code• AC Code• Current FY Authorizations• FY Plus 1 Authorizations• FY Plus 2 Authorizations• FY Plus 3 Authorizations• FY Plus 4 Authorizations


G- i

Examples:

Nomination for Competition

Military Data

G-2


H-1

Appendix H--Ethics Issues Related to Participation in OMB Circular A-76 CostComparison Studies and Exercise of Right of First Refusal of Employment

The following provides guidance concerning the law and employee participation in CAstudies. Activity commanders should encourage maximum participation by theiremployees, particularly in the data collection and review phases of the study, becauseactive employee participation typically results in a comprehensive PWS and a morecomplete MEO. Since circumstances may vary, employees participating in CA studiesshould seek guidance from their supervisor and ethics counselor to determine individualcompliance requirements.

1. Title 18 U.S.C. 207, Restrictions on former officers, employees, and elected officialsof the Executive and Legislative Branches prohibits a Federal employee from personallyand substantially participating in any particular matter that has a direct and predictableeffect on the employees' financial interests. Additionally:

a. These restrictions do not apply at the time of the preparation of the PWS or MEObecause any future employment offer is contingent upon the outcome of the costcomparison.

b. The cost comparison results in the award of a contract only if the contractor'scost is less than the cost of the MEO. Uncertainty as to the eventual outcome of acompetition makes it unlikely that an employee's participation in the study constitutes "adirect and predictable effect" on their financial interests or post-Federal employmentopportunities.

c. Employees' exercise of their Right of First Refusal, by itself, does not constitute"seeking employment" under DODD 5500.7-R, Joint Ethics Regulation, 30 August 1993or as an arrangement regarding future employment.

d. An employees' (and supervisors') Right of First Refusal does not, by itself, createa conflict or appearance of a conflict of interest. Financial interests are imputed only ifan employee enters into employment negotiations while the employee is activelyparticipating in a cost comparison. If this occurs, employees must immediately consultwith their supervisor and ethics counselor to determine whether their participationconstitutes "personal and substantial" participation with a "direct and predictable"outcome for the non-Federal entity making the offer of employment. Ordinarily,providing technical data to assist in the development of a PWS and/or MEO is unlikelyto have a "direct and predictable" effect on either the final MEO or contract offers.


H-2

2. Title 18 U.S.C. 208, Acts affecting a personal financial interest prohibits formerofficers or employees from making a communication or appearance with the intent toinfluence the Federal Government on any particular matter they personally andsubstantially participated in while they were a Federal employee. This prohibitionusually will not apply to most study participants since their participation is generallylimited to the early development of the PWS and MEO and is usually prior to anysolicitation actions.

3. Title 41 U.S.C. 423, Procurement Integrity establishes post-Government employmentrestrictions for employees personally and substantially participating in a solicitation.Personnel subject to this prohibition are generally limited to those employeesperforming evaluations or rendering decisions as part of the source selection process.

a. The FAR Part 3.104-3, Definitions states that the following activities are not"substantial" for the purpose of prohibiting employee participation in A-76 studies:

(1) Participation in management studies

(2) Preparation of the In-House Cost Estimate

(3) Preparation of the MEO

(4) Furnishing data or technical support to be used by others in thedevelopment of the PWS, statement of work, or specifications

b. Individual employees participation in A-76 competitions does not, byitself, automatically jeopardize their exercise of Right of First Refusal, unless:

(1) They were, or formerly acted as, a Procurement Official as defined by Title41 U.S.C. 423, Procurement Integrity.

(2) They formerly made decisions related to:

(a) Awarding a contract, subcontract, task delivery order, or contractmodification

(b) Establishing contract overhead/other rates, approving issuance of apayment to a contractor, or paying/settling a contractor claim against the Government.


I-1

Appendix I--Management Decision Procedure to Convert Activities Not Subject toOMB Circular A-76

1. Activities with 11 or more Full-Time Equivalents desiring to change from in-houseprovision of services where A-76 does not apply or has been waived to contract will:

a. Notify CNO (N4). The CNO (N4) will initiate required Congressional notification..

b. Verify that the present organization's processes are efficient and effective.

c. Conduct a cost/benefit analysis to determine advantages and disadvantages ofcontracting the function. This analysis must consider all costs required by 10 U.S.C.2462. Activities will forward this analysis through their chain of command to CNO (N4).The CNO (N4) will forward this analysis through the Secretariat to the Committees onAppropriations of the House of Representatives and the Senate as required by law.

d. Follow Federal Acquisition Regulations during source selection.

2. This method of converting a function with 11 or more FTEs to contract is amanagement decision. It is not appealable under OMB Circular A-76 RevisedSupplemental Handbook (NOTAL), but is subject to FAR provision for protests.

3. References:

a. Title 10 U.S.C. 2462, Contracting for certain supplies and services requiredwhen cost is lower:

(a) In General. - Except as otherwise provided by law, the Secretary ofDefense shall procure each supply or service necessary for or beneficial to theaccomplishment of the authorized functions of the Department of Defense (otherthan functions which the Secretary of Defense determines must be performed bymilitary or Government personnel) from a source in the private sector if such asource can provide such supply or service to the Department at a cost that is lower(after including any cost differential required by law, Executive Order, or regulation)than the cost at which the Department can provide the same supply or service.

(b) Realistic and Fair Cost Comparisons. - For the purpose of determiningwhether to contract with a source in the private sector for the performance of aDepartment of Defense function on the basis of a comparison of the costs ofprocuring supplies or services from such a source with the costs of providing thesame supplies or services by the Department of Defense, the Secretary of Defense


I-2

shall ensure that all costs considered (including the costs of quality assurance,technical monitoring of the performance of such function, liability insurance,employee retirement and disability benefits, and all other overhead costs) arerealistic and fair.

b. FY 99 Defense Appropriations Act, Section 8014. None of the fundsappropriated by this Act shall be available to convert to contractor performance anactivity or function of the Department of Defense that, on or after the date of enactmentof this Act, is performed by more than 10 Department of Defense civilian employeesuntil a most efficient and cost-effective organization analysis is completed on suchactivity or function and certification of the analysis is made to the Committees onAppropriations of the House of Representatives and the Senate: Provided, That thissection shall not apply to a commercial or industrial type function of the Department ofDefense that: (1) is included on the procurement list established pursuant to section 2 ofthe Act of June 25, 1938 (41 U.S.C. 47), popularly referred to as the Javits-Wagner-O'Day Act; (2) is planned to be converted to performance by a qualified nonprofitagency for the blind or by a qualified nonprofit agency for other severely handicappedindividuals in accordance with that Act; or (3) is planned to be converted to performanceby a qualified firm under 51 per centum Native American ownership.


J- 1

Appendix J--Codes and Definitions of Functional Areas

These functional definitions are provided to assist in reporting CA Function Codes.These codes are from the 30 September 1998 submission of the Commercial Activityinventory to the Office of the Secretary of Defense and are subject to change. They areprovided for reference only and additional guidance will be promulgated separately forfuture inventory reporting.

SOCIAL SERVICESCODE DEFINITIONG001: Care of Remains of DeceasedPersonnel and/or Funeral Services.

Includes commercial activities that providemortuary services, including transportationfrom aerial port of embarkation tomortuary of human remains received fromoverseas mortuaries, inspection,restoration, provision of uniform andinsignia, dressing, flag, placement incasket, and preparation for onwardshipment.

G008: Commissary Store Operation.

G008A: Shelf Stocking.G008B: Check Out.G008C: Meat Processing.G008D: Produce Processing.G008E: Storage and Issue.G008F: Other.G008G: Troop Subsistence Issue Point

Includes commercial activities that; provideall ordering, receipt, storage, stockage,and retailing for commissaries; excludesprocurement of goods for issue or resale.

G009: Clothing Sales Stores Operation. Includes commercial activities that provideordering, receipt, storage, stockage, andretailing of clothing.

G010: Recreational Library Services. Includes commercial activities that operatelibraries maintained primarily for off-dutyuse by military personnel and theirdependents.

G011: Other Morale Welfare andRecreation Services.

Commercial activities maintained primarilyfor the off-duty use of military personnel


J- 2

CODE DEFINITIONand their dependents, including bothappropriated and partially nonappropriatedfund activities. The operation of clubs andperforming messes, and morale supportactivities are included in code G011.Examples of G011 activities are arts andcrafts, entertainment, sports and athletics,swimming, bowling, marina and boating,stables, youth activities, centers, and golf.

G012: Community Services. DoD Directive 1015.1 contains furtheramplification of the categories.

G900: Chaplain Activities and SupportServices.

Includes the command religious program,which includes chaplains and enlistedsupport personnel, as well as commercialactivities that provide non–military-uniquesupport services that supplement thecommand religious program, such asproviding nonpastoral counseling,organists, choir directors, and directors ofreligious education .

G901: Berthing BOQ/BEQ. Includes commercial activities that providetemporary or permanent accommodationsfor officer or enlisted personnel.Management of the facility, room service,and daily cleaning are included.

G904: Family Services. Includes commercial activities that performvarious social services for families, suchas family counseling; financial counselingand planning; or the operation of an abusecenter, child care center, or family aidcenter.

G999: Other Social Services. This code shall only be used for unusualcircumstances and shall not be used toreport organizations or work that can beaccommodated under a specificallydefined code.

G000A: Management. Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).


J- 3

CODE DEFINITIONG000B: Management Support. Includes non-supervisory management

support personnel for the above codedfunctions.

G000C: ADP&E Support. Includes ADP&E support personnel for theabove coded functions.

G000D: Administrative Support. Includes administrative, secretarial andoffice support personnel for the abovecoded functions.

HEALTH SERVICESCODE DEFINITIONH101: Hospital Care. Includes commercial activities that provide

outpatient and inpatient care andconsultative evaluation in the medicalspecialties, including pediatrics andpsychiatry; and the coordination of healthcare delivery relative to the examination,diagnosis, treatment, and disposition ofmedical inpatients.

H102: Surgical Care. Includes commercial activities that provideoutpatient and inpatient care andconsultative evaluation in the surgicalspecialties, including obstetrics;gynecology; ophthalmology andotorhinolaryngology; and the coordinationof health care delivery relative to theexamination, treatment, diagnosis, anddisposition of surgical patients.

H105: Nutritional Care. Includes commercial activities that providehospital food services for inpatients andoutpatients, dietetic treatment, counselingof patients, and nutritional education.

H106: Pathology Services. Includes commercial activities involved inthe operation of laboratories providingcomprehensive clinical and anatomicalpathology services, DoD military bloodprogram and blood bank activities, andarea reference laboratories.

H107: Radiology Services. Includes commercial activities that providediagnostic and therapeutic radiological


J- 4

CODE DEFINITIONservice to inpatients and outpatients,including the processing, examining,interpreting, and storage and retrieval ofradiographs, fluorographs, andradiotherapy.

H108: Pharmacy Services. Includes commercial activities thatproduce, preserve, store, compound,manufacture, package, control, assay,dispense, and distribute medications(including intravenous solutions) forinpatients and outpatients.

H109: Physical Therapy. Includes commercial activities that providecare and treatment to patients whoseability to function is impaired or threatenedby disease or injury; primarily servepatients whose actual impairment isrelated to neuro-musculoskeletal,pulmonary, and cardiovascular systems;and evaluate the function and impairmentof these systems and select and applytherapeutic procedures to maintain,improve, or restore these functions.

H110: Materiel Services. Includes commercial activities that provideor arrange for the supplies, equipment,and certain services necessary to supportthe mission of the medical facility andwhose responsibilities includeprocurement, inventory control, receipt,storage, quality assurance, issue, turn-in,disposition, property accounting, andreporting actions for designated medicaland nonmedical supplies and equipment.

H111: Orthopedic Services. Includes commercial activities thatconstruct orthopedic appliances, such asbraces, casts, splints, supports, and shoesfrom impressions, forms, molds, and otherspecifications.

H112: Ambulance Service. Includes commercial activities that providetransportation for personnel who areinjured, sick, or otherwise require medical


J- 5

CODE DEFINITIONtreatment, including standby duty insupport of military activities andambulance bus services.

H113: Dental Care. Includes commercial activities that provideoral examinations, patient education,diagnosis, treatment, and care including allphases of restorative dentistry, oralsurgery, prosthodontics, oral pathology,periodontics, orthodontics, endodontics,oral hygiene, preventive dentistry, andradiodontics.

H114: Dental Laboratories. Includes commercial activities that operatedental prosthetic laboratories required tosupport the provision of comprehensivedental care. Services may includepreparing casts and models; repairingdentures; fabricating transitional,temporary, or orthodontic appliances; andfinishing dentures.

H115: Clinics and Dispensaries. Includes commercial activities that operatefreestanding clinics and dispensaries thatprovide health care services, such ashealth clinics, occupational health clinics,and occupational health nursing offices.Operations are relatively independent of amedical treatment facility and areseparable for in-house or contractperformance.

H116: Veterinary Services. Includes commercial activities that providea complete wholesomeness and a quality-assurance food-inspection program.Activities include sanitation, inspection offood received, surveillance inspections,and laboratory examination and analysis; acomplete zoonosis control program;complete medical care for Government-owned animals; veterinary medical supportfor biomedical research and development;support to other Federal agencies whenrequested and authorized; assistance in a


J- 6

CODE DEFINITIONcomprehensive preventive medicineprogram; and determination of fitness of allfoods that may have been contaminatedby chemical, bacteriological, or radioactivematerials.

H117: Medical Records Transcription. Includes commercial activities thattranscribe, file, and maintain medicalrecords.

H118: Nursing Services. Includes commercial activities that providecare and treatment for inpatients andoutpatients not required to be performedby a doctor.

H119: Preventive Medicine. Includes commercial activities that operatewellness or holistic clinics (preventivemedicine), information centers, andresearch laboratories.

H120: Occupational Health. Includes commercial activities thatdevelop, monitor, and inspect installationsafety conditions.

H121: Drug Rehabilitation. Includes commercial activities that operatealcohol treatment facilities, urine testing fordrug content, and drug/alcohol counselingcenters.

H999: Other Health Services. This code shall only be used for unusualcircumstances and shall not be used toreport organizations or work that can beaccommodated under a specificallydefined code.

H000A: Management. Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).

H000B: Management Support. Includes non-supervisory managementsupport personnel for the above codedfunctions.

H000C: ADP&E Support. Includes ADP&E support personnel for theabove coded functions.

H000D: Administrative Support. Includes administrative, secretarial andoffice support personnel for the abovecoded functions.


J- 7

INTERMEDIATE, DIRECT, OR GENERAL REPAIR AND MAINTENANCE OFEQUIPMENT

Definition. Maintenance authorized and performed by designated maintenancecommercial activities in support of using activities. Normally, it is limited to replacementand overhaul of unserviceable parts, subassemblies, or assemblies. It includes (1)intermediate, direct, or general maintenance performed by fixed activities that are notdesigned for deployment to combat areas and that provide direct support oforganizations performing or designed to perform combat missions from bases in theUnited States, and (2) any testing conducted to check the repair procedure.Commercial activities engaged in intermediate, direct, or general maintenance and/orrepair of equipment are to be grouped according to the equipment predominantlyhandled, as follows:

CODE DEFINITIONJ501: Aircraft. Aircraft and associated equipment.

Includes armament, electronic andcommunications equipment, engines, andany other equipment that is an integral partof an aircraft.

J502: Aircraft Engines. Aircraft engines that are not repaired whilean integral part of the aircraft.

J503: Missiles. Missile systems and associatedequipment. Includes mechanical,electronics, and communication equipmentthat is an integral part of missile systems.

J504: Vessels. All vessels, including armament,electronics, communications and any otherequipment that is an integral part of thevessel.

J505: Combat Vehicles. Tanks, armored personnel carriers, self-propelled artillery, and other combatvehicles. Includes armament, fire control,electronic, and communications equipmentthat is an integral part of a combat vehicle.

J506: Noncombat Vehicles. Automotive equipment, such as tactical,support, and administrative vehicles.Includes electronic and communicationsequipment that is an integral part of thenoncombat vehicle.


J- 8

CODE DEFINITIONJ507: Electronic and CommunicationsEquipment.

Stationary, mobile, portable, and otherelectronic and communications equipment.Excludes electronic and communicationsequipment that is an integral part ofanother weapon or support system.Maintenance of automatic data processingequipment (ADPE) that is not an integralpart of a communications system shall bereported under functional code W825;maintenance of tactical ADPE shall bereported under function code J999.

J510: Railway Equipment. Locomotives of any type or gauge,including steam, compressed air, straightelectric, storage battery, diesel electric,gasoline, electric, diesel mechanicallocomotives, railway cars, and cabooses.Includes electrical equipment forlocomotives and cars, motors, generators,wiring supplies for railway tracks for bothpropulsion and signal circuits, and on-board communications and controlequipment.

J511: Special Equipment. Construction equipment, weight lifting,power, and materiel handling equipment(MHE).

J512: Armament. Small arms; artillery and guns; nuclearmunitions; chemical, biological, andradiological (CBR) items; conventionalammunition; and all other ordnance items.Excludes armament that is an integral partof another weapon or support system.

J513: Dining Facility Equipment. Dining facility kitchen appliances andequipment.

J514: Medical and Dental Equipment. Medical and dental equipment.J515: Containers, Textiles, Tents, andTarpaulins.

Containers, tents, tarpaulins, other textiles,and organizational clothing.

J516: Metal Containers. Container Express (CONEX) containers,gasoline, containers, and other metalcontainers.

J517: Training Devices and Audiovisual Training devices and audiovisual


J- 9

CODE DEFINITIONEquipment. equipment. Excludes maintenance of

locally fabricated devices and functionsreported under codes T807 and T900.

J519: Industrial Plant Equipment. That part of plant equipment used to cut,abrade, grind, shape, form, join, test,measure, heat, or otherwise alter thephysical, electrical, or chemical propertiesof materials, components, or end itemsentailed in manufacturing, maintenance,supply processing, assembly, or researchand development operations.

J520: Test, Measurement, and DiagnosticEquipment.

Test, measurement, and diagnosticequipment (TMDE) that has resident in it aprogrammable computer. Included isequipment referred to as automated testequipment (ATE).

J521: Other Test, Measurement, andDiagnostic-Equipment.

TMDE not classified as ATE or that doesnot contain a resident programmablecomputer. Includes such items aselectronic meters, armament circuittesters, and other specialized testers.

J522: Aeronautical Support Equipment. Aeronautical support equipment, excludingTMDE (and ATE). Includes such items asground electrical power carts, aircraft towtractors, ground air conditioners, enginestands, and trailers. Excludesaeronautical equipment reported underJ501.

J999: Other Intermediate, Direct, orGeneral Repair and Maintenance ofEquipment.

This code shall only be used for unusualcircumstances and shall not be used toreport organizations or work that can beaccommodated under a specificallydefined code.

J000A: Management. Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).

J000B: Management Support. Includes non-supervisory managementsupport personnel for the above codedfunctions.


J-10

CODE DEFINITIONJ000C: ADP&E Support. Includes ADP&E support personnel for the

above coded functions.J000D: Administrative Support. Includes administrative, secretarial and

office support personnel for the abovecoded functions.

DEPOT REPAIR, MAINTENANCE, MODIFICATION, CONVERSION, OR OVERHAULOF EQUIPMENT

Definition. The maintenance performed on materiel that requires major overhaul or acomplete rebuild of parts, assemblies, subassemblies, and end items, including themanufacture of parts, modifications, testing, and reclamation, as required. Depotmaintenance serves to support lower categories of maintenance and provides stocks ofserviceable equipment by using more extensive facilities for repair than are available inlower-level maintenance activities. (See DoD Instruction 4151. 18 for furtheramplification of the category definitions reflected below.) Depot or indirect maintenancefunctions are identified by the type of equipment maintained or repaired.

CODE DEFINITIONK531: Aircraft. Aircraft and associated equipment.

Includes armament, electronics andcommunications equipment, engines, andany other equipment that is an integral partof an aircraft. Aeronautical supportequipment not reported separately undercode K548.

K532: Aircraft Engines. Aircraft engines that are not repaired whilean integral part of the aircraft.

K533: Missiles. Missile systems and associatedequipment. Includes mechanical,electronic, and communications equipmentthat is an integral part of missile systems.

K534: Vessels. All vessels, including armament,electronics, and communicationsequipment, and any other equipment thatis an integral part of a vessel.

K535: Combat Vehicles. Tanks, armored personnel carriers, self-propelled artillery, and other combatvehicles. Includes armament, fire control,electronics, and communications


J-11

CODE DEFINITIONequipment that is an integral part of acombat vehicle.

K536: Noncombat Vehicles. Automotive equipment, such as tacticalsupport and administrative vehicles.Includes electronic and communicationsequipment that are an integral part of thevehicle.

K537: Electronic and CommunicationsEquipment.

Stationary, mobile, portable, and otherelectronics and communicationsequipment. Excludes electronic andcommunications equipment that is anintegral part of another weapon/supportsystem. Maintenance of ADPE, which isnot an integral part of a communicationssystem, is reported under functional codeW825.

K538: Railway Equipment. Locomotives of any type or gauge,including steam, compressed air, straightelectric, storage battery, diesel electric,gasoline, electric, and diesel mechanical;railway cars; and cabooses. Includeselectrical equipment for locomotives andcars, motors, generators, wiring suppliesfor railway tracks for both propulsion andsignal circuits, and on-boardcommunication and control equipment.

K539: Special Equipment. Construction equipment, weight lifting,power, and materiel-handling equipment.

K540: Armament. Small arms; artillery and guns; nuclearmunitions, CBR items; conventionalammunition; and all other ordnance items.Excludes armament that is an integral partof another weapon or support system.

K541: Industrial Plant Equipment. That part of plant equipment used to cut,abrade, grind, shape, form, join, test,measure, heat, or otherwise alter thephysical, electrical, or chemical propertiesof materials, components, or end itemsentailed in manufacturing, maintenance,supply, processing, assembly, or research


J-12

CODE DEFINITIONand development operations.

K542: Dining Facility Equipment. Dining facility kitchen appliances andequipment, including field feedingequipment.

K543: Medical and Dental Equipment. Medical and dental equipment.K544: Containers, Textiles, Tents andTarpaulins.

Containers, tents, tarpaulins, and othertextiles.

K545: Metal Containers. CONEX containers, gasoline containers,and other metal containers.

K546: Test Measurement and DiagnosticEquipment (TMDE).

TMDE that has resident in it aprogrammable computer. Included isequipment referred to as automated testequipment (ATE).

K547: Other Test Measurement andDiagnostic Equipment.

Test measurement and diagnosticequipment not classified as ATE or thatdoes not contain a resident programmablecomputer. Includes such items aselectronic meters, armament circuittesters, and other specialized testers.

K548: Aeronautical Support Equipment. Aeronautical support equipment excludingTMDE and ATE. Includes such items asground electrical power carts, aircraft towtractors, ground air conditioners, enginestands, and trailers. Excludesaeronautical support equipment reportedunder code K531.

K999: Other Depot Repair MaintenanceModification, Conversion, or Overhaul ofEquipment.

This code shall only used for unusualcircumstances and shall not be used toreport organizations or work that can beaccommodated under a specificallydefined code.

K000A: Management. Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).

K000B: Management Support. Includes non-supervisory managementsupport personnel for the above codedfunctions.

K000C: ADP&E Support. Includes ADP&E support personnel for theabove coded functions.


J-13

CODE DEFINITIONK000D: Administrative Support. Includes administrative, secretarial and

office support personnel for the abovecoded functions.

BASE MAINTENANCE/MULTI/FUNCTION CONTRACTS

CODE DEFINITIONP100: Base Maintenance/multifunctionContracts.

Includes all umbrella-type contracts wherethe contractor performs more than onefunction at one or more installations.(Specific functions shall be identified asnonadditive entries in the CAMISdatabase.)

P000A: Management. Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).

P000B: Management Support. Includes non-supervisory managementsupport personnel for the above codedfunctions.

P000C: ADP&E Support. Includes ADP&E support personnel for theabove coded functions.

P000D: Administrative Support. Includes administrative, secretarial andoffice support personnel for the abovecoded functions.

RESEARCH, DEVELOPMENT, TEST, AND EVALUATION (RDT&E) SUPPORT

CODE DEFINITIONR600: RDT&E. Includes those scientists, engineers and

other professionals needed to maintain thedevelopment of future weapon systems,support equipment and personnelequipment and testing. Also, includesthose who test and evaluate futuresystems.

R660: RDT&E Support. Includes all effort not reported elsewheredirected toward support of installation oroperations required for research,development, test, and evaluation use.


J-14

CODE DEFINITIONIncluded are maintenance support oflaboratories, operation and maintenance oftest ranges, and maintenance of testaircraft and ships.

R000A: Management. Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).

R000B: Management Support. Includes non-supervisory managementsupport personnel for the above codedfunctions.

R000C: ADP&E Support. Includes ADP&E support personnel for theabove coded functions.

R000D: Administrative Support. Includes administrative, secretarial andoffice support personnel for the abovecoded functions.

INSTALLATION SERVICES

CODE DEFINITIONS700: Natural Resource Services. Includes those activities that provide

products or services that implementnatural resource management plans in theareas of fish, game, wildlife, forestry,watershed areas or groundwater table,erosion control, and mineral depositmanagement.

S701: Advertising and Public RelationsServices.

Includes commercial activities responsiblefor advertising and public relations insupport of public affairs offices, installationnewspapers and publications, andinformation offices.

S702: Financial and Payroll Services. Includes commercial activities that preparepayroll, print checks, escrow, or changepayroll accounts for personnel. Includesother services normally associated withbanking operations.

S703: Debt Collection. Includes commercial activities thatmonitor, record, and collect debts incurredby overdrafts, bad checks, or delinquent


J-15

CODE DEFINITIONaccounts.

S706: Installation Bus Services.

S706A: Scheduled Bus Services.S706B: Unscheduled Bus Services.S706C: Dependent School Bus Services.S706D:Other Bus Services.

Includes commercial activities that operatelocal, intrapost, and interpost scheduledbus services. Includes scheduledmovement of personnel over regularroutes by administrative motor vehicles toinclude taxi and dependent school busservices.

S708: Laundry and Dry CleaningServices.

Includes commercial activities that operateand maintain laundry and dry-cleaningfacilities.

S709: Custodial Services. Includes commercial activities that providejanitorial and housekeeping services tomaintain safe and sanitary conditions andpreserve property.

S710: Pest Management. Includes commercial activities that providecontrol measures directed against fungi,insects, rodents, and other pests.

S712: Refuse Collection and DisposalServices.

Includes commercial activities that operateincinerators, sanitary fills, and regulateddumps, and perform all other approvedrefuse collection and disposal services.

S713: Food Services.

S713A: Food Preparation andAdministration.S713B: Mess Attendants and

Includes commercial activities engaged inthe operation and administration of foodpreparation and serving facilities.Excludes operation of central bakeries,pastry kitchens, and central meat-processing facilities that produce a productand are reported under functional areaX934. Excludes hospital food serviceoperations (under code H105).


J-16

CODE DEFINITIONHousekeeping Services.S714: Furniture. Includes commercial activities that repair

and refurbish furniture.S715: Office Equipment. Includes commercial activities that

maintain and repair typewriters,calculators, and adding machines.

S716: Motor Vehicle Operation.

S716A: Taxi Service.S716B: Bus Service (unless in S706).S716C: Motor Pool Operation.S716D: Crane Operation (includes riggingand excludes those listed in T800G).S716E: Heavy Truck Operation.S716F: Construction EquipmentOperation.S716I: Driver/Operator Licensing and Test.S716J: Other Vehicle Operations (lighttruck/auto).S716K: Fuel Truck Operations.S716M: Tow Truck Operations.

Includes commercial activities that operatelocal administrative motor transportationservices. Excludes installation busservices reported in functional area S706.

S717: Motor Vehicle Maintenance.

S717A: Upholstery Maintenance andRepair.S717B: Glass Replacement and WindowRepair.S717C: Body Repair and Painting.S717D: Accessory Overhaul.S717E: General Repairs/MinorMaintenance.S717F: Battery Maintenance and Repair.

Includes commercial activities thatmaintain automotive equipment, such assupport and administrative vehicles.Includes electronic and communicationsequipment that are an integral part of thevehicle.


J-17

CODE DEFINITIONS717G: Tire Maintenance and Repair.S717H: Major Component Overhaul.S7171: Material Handling EquipmentMaintenance.S717J: Crane Maintenance.S717K: Construction EquipmentMaintenance.S717L: Frame and Wheel Alignment.S717M: Other Motor Vehicle Maintenance.S718: Fire Prevention and Protection.

S718A: Fire Protection EngineeringS718B: Fire Station AdministrationS718C: Fire Prevention.S718D: Fire Station Operations.S718E: Crash and Rescue.S718F: Structural Fire Suppression.S718G: Fire & Crash/Rescue EquipmentMajor Maintenance.S718H: Other Fire Prevention andProtection.

Includes activities that operate andmaintain fire protection and preventiveservices. Includes routine maintenanceand repair of fire equipment and theinstallation of fire prevention equipment.(NOTE: Check Section 2465 of title 10,United States Code, for prohibitions inconverting some of these functions tocontract.)

S719: Military Clothing. Includes commercial activities that order,receive, store, issue, and alter militaryclothing and repair military shoes.Excludes repair of organizational clothingreported under code J515.

S724: Guard Service. Includes commercial activities engaged inphysical security operations that providefor installation security and intransitprotection of military property from loss ordamage. (NOTE: Check Section 2465 ofTitle 10 U.S.C. for prohibitions in


J-18

CODE DEFINITION

S724A: Ingress and egress control.

S724B: Physical security patrols andposts.

S724C: Conventional arms, ammunition,and explosives (CAAE) security.

S724D: Animal control.

S724E: Visitor information services.

S724F: Vehicle impoundment.

S724G: Registration functions.

S724S: Other guard service.

converting some of these functions tocontract.)

Regulation of person, material, andvehicles entering or exiting a designatedarea to provide protection of theinstallation and Government property.

Mobile and static physical security guardactivities that provide protection ofinstallation or Government property.

Dedicated security guards for CAAE.

Patrolling for, capture of, and response tocomplaints about uncontrolled, dangerous,and disabled animals on militaryinstallations.

Providing information to installationresident and visitors about street, agency,unit, and activity locations.

Removal, accountability, security, andprocessing of vehicles impounded onmilitary installations.

Administration, filing, processing, andretrieval information about privately owneditems that must be registered on militaryinstallations.

S725: Electrical Plants and Systems. Includes commercial activities thatoperate, maintain, and repair Government-owned electrical plants and systems.

S726: Heating Plants and Systems. Includes commercial activities thatoperate, maintain, and repair Government-owned heating plants and systems thathave a capacity greater than 750,000


J-19

CODE DEFINITIONBritish Thermal Units (BTUs). Codes Z991or Z992 shall be used for systems thathave a capacity of less than 750,000BTUs, as applicable.

S727: Water Plants and Systems. Includes commercial activities thatoperate, maintain, and repair Government-owned water plants and systems.

S728: Sewage and Waste Plants andSystems.

Includes commercial activities thatoperate, maintain, and repair Government-owned sewage and waste plants andsystems.

S729: Air Conditioning and RefrigerationPlants.

Includes commercial activities thatoperate, maintain, and repair Government-owned air conditioning and refrigerationplants whose capacity is greater than 5tons. Codes Z991 or Z992 shall be usedfor plants with less than a 5-ton capacity,as applicable.

S730: Other Services or Utilities. Includes commercial activities thatoperate, maintain, and repair otherGovernment-owned services or utilities.

S731: Base Supply Operations. Includes commercial activities that operatecentralized installation supply functionsproviding supplies and equipment to allassigned or attached units. Performs allbasic supply functions to determinerequirements for all requisition, receipt,storage, issuance, and accountability formateriel.

S732: Warehousing and Distribution ofPublications.

Includes commercial activities that receive,store, and distribute publications and blankforms.

S740: Installation Transportation Office. Includes technical, clerical, andadministrative commercial activities thatsupport traffic management servicesrelated to the procurement of freight andpassenger service from commercial “forhire” transportation companies. Excludesinstallation transportation functionsdescribed under codes S706, S716, S717,


J-20

CODE DEFINITION

S740A: Installation TransportationManagement and Administration.S740B: Materiel Movements.S740C: Personnel Movements.S740D: Personal Property Activities.S740E: Quality Control and Inspection.S740F: Unit Movements.

T810, T811, T812, and T814.

S750: Museum Operations.S760: Contractor-Operated Parts Storesand Contractor-Operated Civil EngineeringSupply Stores.S999: Other Installation Services. This code shall only be used for unusual

circumstances and shall not be used toreport organizations or work that can beaccommodated under a specificallydefined code.

S000A: Management. Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).

S000B: Management Support. Includes non-supervisory managementsupport personnel for the above codedfunctions.

S000C: ADP&E Support. Includes ADP&E support personnel for theabove coded functions.

S000D: Administrative Support. Includes administrative, secretarial andoffice support personnel for the abovecoded functions.

OTHER NONMANUFACTURING OPERATIONS

CODE DEFINITIONT800: Ocean Terminal Operations. Includes commercial activities that operate

terminals transferring cargo betweenoverland and sealift transportation.Includes handling of Government cargothrough commercial water terminals.


J-21

CODE DEFINITIONT800A: Pier Operations.

T800B: Cargo Handling Equipment.

T800C: Port Cargo Operations.

T800D: Vehicle Preparation.

T800E: Lumber Operations.

T800F: Materiel Handling Equipment(MHE) Operations.

Includes commercial activities that providestevedore and shipwright carpentryoperations supporting the loading,stowage, and discharge of cargo andcontainers on and off ships, and super-vision of operations at commercial piersand military ocean terminals.

Includes commercial activities that operateand maintain barge derricks, gantries,cranes, forklifts, and other materielhandling equipment used to handle cargowithin the terminal area.

Includes commercial activities that loadand unload railcars and trucks, pack,repack, crate, warehouse, and store cargomoving through the terminal, and stuff andunstuff containers.

Includes commercial activities that prepareGovernment and privately owned vehicles(POVS) for ocean shipment, inspection,stowage in containers, transportation topier, processing, and issue of importvehicles to owners.

Includes commercial activities thatsegregate reclaimable lumber fromdunnage removed from ships, railcars, andtrucks; remove nails; even lengths;inspect; and return the lumber to inventoryfor reuse. Includes receipt, storage, andissue of new lumber.

Includes commercial activities that deliverMHE to user agencies, perform onsitefueling, and operate special purpose andheavy capacity equipment.


J-22

CODE DEFINITIONT800G: Crane Operations.

T800H: Breakbulk Cargo Operations.

T8001: Other Ocean Terminal Operations.

Includes commercial activities that operateand perform first-echelon maintenance ofbarge derricks, gantries, and truck-mounted cranes in support of vessels andterminal cargo activities.

Includes commercial activities that providestevedoring, shipwright carpentry,stevedore transportation, and the loadingand unloading of noncontainerized cargo.

T801: Storage and Warehousing.

T801A: Receipt.

T801B: Packing and Crating of HouseholdGoods.

T801C: Shipping.

Includes commercial activities that receivemateriel into depots and other storage andwarehousing facilities, provide care forsupplies, and issue and ship materiel.Excludes installation supply in support ofunit and tenet activities described in S731.

Includes commercial activities that receivesupplies and related documents andinformation. This includes materielhandling and related actions, such asmaterials segregation and checking, andtallying incident to receipt.

Includes commercial activities performingpacking and crating operations describedin T801H, incident to the movement orstorage of household goods.

Includes commercial activities that deliverstocks withdrawn from storage to shipping.Includes onloading and offloading ofstocks from transportation carriers,blocking, bracing, dunnage, checking,tallying, and materiel handling in centralshipping area and related documentationand information operations.


J-23

CODE DEFINITIONT801D: Care, Re-warehousing, andSupport of Materiel.

T801E: Preservation and Packaging.

T801F: Unit and Set Assembly andDisassembly.

T801G: Special Processing of Non StockFund-Owned Materiel.

Includes commercial activities that providefor actions that must be taken to protectstocks in storage, including physicalhandling, temperature control, assemblyplacement and preventive maintenance ofstorage aids, and realigning stockconfiguration; providefor movement of stocks from one storagelocation to another and related checking,tallying, and handling; and provide for anywork being performed within generalstorage support that cannot be identifiedclearly as one of the subfunctionsdescribed above.

Includes commercial activities thatpreserve, re-preserve, and pack materielto be placed in storage or to be shipped.Excludes applicationof final (exterior) shipping containers.

Includes commercial activities that gatheror bring together items of variousnomenclature (parts, components, andbasic issue items) and group, assemble, orrestore them to or with an item of anothernomenclature (such as parent end item orassemblage) to permit shipment under asingle document. This also includesblocking, bracing, and packingpreparations within the inner shippingcontainer; physical handling and loading;and reverse operation of disassemblingsuch units.

Includes commercial activities performingspecial processing actions describedbelow that must be performed on InventoryControl Point (ICP) controlled, nonstockfund-owned materiel by technically


J-24

CODE DEFINITION

T801H: Packing and Crating.

T8011: Other Storage and Warehousing.

qualified depot maintenance personnel,using regular or special maintenance toolsor equipment. Includes disassembly orreassembly or re-serviceable ICPcontrolled materiel being readied formovement, in-house storage, or out-of-house location such as a port to acommercial or DoD operated maintenanceor storage facility, property disposal ordemilitarization activity, including blocking,bracing cushioning, and packing.

Includes commercial activities that placesupplies in their final, exterior containersready for shipment. Includes the nailing,strapping, sealing, stapling, masking,marking, and weighing of the exteriorcontainer. Also, includes all physicalhandling, unloading, and loading ofmaterial within the packing and shippingarea; checking and tallying material in andout; all operations incident to packing,repacking, or recrating for shipment,including on-line fabrication of tailoredboxes, crates, bit inserts, blocking, bracingand cushioning shrouding, overpacking,containerization, and the packing ofmaterial in transportation containers.Excludes packing of household goods andpersonal effects reported under codeT801B.

T802: Cataloging. Includes commercial activities that preparesupply catalogs and furnish catalogingdata on all items of supply for distributionto all echelons worldwide. Include catalogfiles, preparation, and revision of all itemidentifications for all logistics functions;compilation of Federal catalog sectionsand allied publication; development of


J-25

CODE DEFINITIONFederal item identification guides, andprocurement identification descriptions.Includes printing and publication ofFederal supply catalogs and related alliedpublications.

T803: Acceptance Testing. Includes commercial activities that inspectand test supplies and materiel to ensurethat products meet minimum requirementsof applicable specifications, standards,and similar technical criteria; laboratoriesand other facilities with inspection and testcapabilities; and activities engaged inproduction acceptance testing ofammunition, aircraft armament, mobilitymaterial, and other military equipment.

T804: Architect-Engineering Services. Includes commercial activities that providearchitect/engineer services. Excludesengineering and technical servicesreported in functional area T813.

T805: Operation of Bulk Liquid Storage. Includes commercial activities that operatebulk petroleum storage facilities. Includesoperation of off-vessel discharging andloading facilities, fixed and portable bulkstorage facilities, pipelines, pumps, andother related equipment within or betweenstorage facilities or extended to usingagencies (excludes aircraft fuelingservices); and handling of drums withinbulk fuel activities. Excludes aircraftfueling services reported under code T814.

T806: Printing and Reproduction. Includes commercial activities that print,duplicate, and copy. Excludes user-operated office copying equipment.

T807: Audiovisual and Visual InformationServices.

T807A: Base VI Support.

Includes commercial activities that providebase audiovisual (AV) and visualinformation (VI) support, production,depositories, technical documentation, andbroadcasting.

Includes commercial activities that provide


J-26

CODE DEFINITION

T807B: AV Production.

T807C: AV Depositories.

T807D: Technical Documentation.

T807E: Broadcasting.

T807F: VI Documentation.

still photographic products and services,graphic arts products and services, AVlibrary services, AV training aids, modelsand displays, presentation services, andAV equipment maintenance. May alsoinclude photographic or electronicdocumentation for local use.

Includes commercial activities thatproduce, reproduce, distribute, and areaccountable for all AV productions, asdefined in DoD Regulation 5040.2 of 7 Dec87.

Includes commercial activities that store,issue, receive, and maintain AV productsat the central library level. Includesrecords center operations for AV products.

Includes commercial activities that providemedical or intelligence documentation,optical instrumentation, and armamentrecording.

Includes commercial activities thatproduce, reproduce and distribute AVproducts/productions only for broadcastuse.

Includes commercial activities that providemotion media (film or tape) stillphotography and audio recording oftechnical and nontechnical events, as theyoccur, usually not controlled by therecording crew. VI documentation(VIDOC) encompasses OperationalDocumentation (OPDOC) and TECDOC,OPDOC is VI (photographic or electronic)recording of activities, or multipleperspectives of the same activity, to


J-27

CODE DEFINITION

T807G: AV Central Library (InventoryControl Point).

T807K: AV Design Service.

convey information about people, placesand things.

Includes commercial activities that receive,store, issue, and maintain AV products atthe central library level. May or may notinclude records center operations for AVproducts.

Includes commercial activities that provideprofessional consultation servicesinvolving the selection, design, anddevelopment of AV equipment, or AVfacilities.

T808: Mapping and Charting. Includes commercial activities that design,compile, print, and disseminatecartographic and geodetic products.

T809: Administrative Telephone Service. Includes commercial activities that operateand maintain the common-user,administrative telephone systems at DoDinstallations and activities. Includestelephone operator services; rangecommunication; emergency actionconsoles, and the cable distribution portionof a fire alarm, intrusion detection,emergency monitoring and control data,and similar systems that require use of atelephone system.

T810: Air Transportation Services. Includes commercial activities that operateand maintain nontactical aircraft that areassigned to commands and installationsand used for administrative movement ofpersonnel and supplies.

T811: Water Transportation Services. Includes commercial activities that operateand maintain nontactical watercraft thatare assigned to commands andinstallations and are used foradministrative movement of personnel andsupplies.


J-28

CODE DEFINITIONT811A: Water Transportation Services(except tug operations).

T811B: Tug Operations.T812: Rail Transportation Services. Includes commercial activities that operate

and maintain nontactical rail equipmentassigned to commands and installationand used for administrative movement ofpersonnel and supplies.

T813: Engineering and TechnicalServices.

T813A: Contractor Plant Services.

T813B: Contract Field Services (CFS).

T813C: In-house Engineering and

Includes commercial activities that advise,instruct, and train DoD personnel in theinstallation, operation, and maintenance ofDoD weapons, equipment, and systems.These services include transmitting thetechnical skill capability to DoD personnelso they can install, maintain, and operatesuch equipment and keep it in a high stateof military readiness.

Includes commercial manufacturers ofmilitary equipment contracted to providetechnical and engineering services to DoDpersonnel. Qualified employees of themanufacturer furnish these services in themanufacturer plants and facilities.Through this program, the special skills,knowledge, experience, and technical dataof the manufacturer are provided for use intraining, training aid programs, and otheressential services directly related to thedevelopment of the technical capabilityrequired to install, operate, maintain,supply, and store such equipment.

Includes commercial activities that provideservices of qualified contractor personnelwho provide onsite technical andengineering services to DoD personnel.

Includes commercial activities that provide


J-29

CODE DEFINITIONTechnical Services.

T813D: Other Engineering and TechnicalServices.

technical and engineering servicesdescribed in code T813A and T813Babove that are provided by Governmentemployees.

T814: Fueling Service (Aircraft). Includes commercial activities thatdistribute aviation petroleum, oil, andlubricant products. Includes operation oftrucks and hydrants.

T815: Scrap Metal Operation. Includes commercial activities that bale orshear metal scrap and melt or sweataluminum scrap.

T816: Telecommunication Centers. Includes commercial activities that operateand maintain telecommunication centers,nontactical radios, automatic messagedistribution systems, technical controlfacilities, and other systems integral to thecommunication center. Includesoperations and maintenance of air trafficcontrol equipment and facilities.

T817: Other Communications andElectronics Systems.

Includes commercial activities that operateand maintain communications andelectronics systems not included in T809and T816.

T818: Systems Engineering andInstallation of Communications Systems.

Includes commercial activities that provideengineering and installation services,including design and drafting servicesassociated with functions specified inT809, T816, and T817.

T819: Preparation and Disposal of Excessand Surplus Property.

Includes commercial activities that accept,classify, and dispose of surplusGovernment property, including scrapmetal.

T820: Administrative Support Services. Includes commercial activities that providecentralized administrative support servicesnot included specifically in anotherfunctional category. These activitiesrender services to multiple activities


J-30

CODE DEFINITION

T820A: Word Processing Centers.T820B: Reference and Technical Libraries.T820C: Microfilming.T820D: Internal Mail and MessengerServices.T820E: Translation Services.T820F: Publication Distribution Centers.T820G: Field Printing and Publication.

T820H: Compliance Auditing.T8201: Court Reporting.T820J: Other.

throughout an organization or to multipleorganizations, such as providing a steno ortyping pool rather than a secretaryassigned to an individual. Typicalactivities included are word-processingcenters, reference and technical libraries,microfilming, messenger service,translation services, and publicationdistribution centers.

Includes those activities that print orreproduce official publications, regulations,and orders. Includes management andoperation of the printing facility.

T821: Special Studies and Analyses.

T821A: Cost Benefit Analyses.T821B: Statistical Analyses.T821C: Scientific Data Studies.T821D: Regulatory Studies.T821E: Defense, Education, EnergyStudies.T821F: Legal/Litigation Studies.

Includes commercial activities that performresearch, collect data, conduct time-motion studies, or pursue some otherplanned methodology to analyze a specificissue, system, device, boat, plane, orvehicle for management. Such activitiesmay be temporary or permanent.


J-31

CODE DEFINITIONT821G : Management Studies.T900: Training Devices and Simulators. Includes commercial activities that provide

training aids, devices, simulator design,fabrication, issue, operation, maintenance,support, and services.

T999: Other NonmanufacturingOperations.T000A: Management. Includes authorizations for

managers/supervisors for the above codedfunctions (does not include first linesupervisors).

T000B: Management Support. Includes non-supervisory managementsupport personnel for the above codedfunctions.

T000C: ADP&E Support. Includes ADP&E support personnel for theabove coded functions.

T000D: Administrative Support. Includes administrative, secretarial andoffice support personnel for the abovecoded functions.

EDUCATION AND TRAINING

Definition. Includes commercial activities that conduct courses of instruction attendedby civilian or military personnel of the Department of Defense. Terminology ofcategories and subcategories primarily for military personnel (marked below by twoasterisks (**)) follows the definitions of the statutory Military Manpower Training Reportsubmitted annually to Congress. This series includes only the conduct of courses ofinstruction; it does not include education and training support functions (that is, BaseOperations Functions in the S series and Nonmanufacturing Operations in the Tseries). A course is any separately identified instructional entity or unit appearing in aformal school or course catalog.

CODE DEFINITIONU100: Recruit Training. The instruction of recruits.U200: Officer Acquisition Training.** Programs concerned with officer

acquisition training.U300: Specialized Skill Training.** Includes Army One-Station Unit Training,

Naval Apprenticeship Training , and healthcare training.

U400: Flight Training.** Includes flight familiarization training.


J-32

CODE DEFINITIONU500: Professional DevelopmentEducation.**U510: Professional Military Education.** Generally, the conduct of instruction at

basic, intermediate, and senior MilitaryService schools and colleges, and enlistedleadership.

U520: Graduate Education, Fully Funded,Full-Time.**U530: Other Full-Time EducationPrograms.**U540: Off-Duty (Voluntary) and On-DutyEducation Programs.**

Includes the conduct of Basic SkillsEducation Program; English as a SecondLanguage courses ; skill-developmentcourses; and graduate, undergraduate,vocational/technical, and high schoolcompletion programs for personnel withouta diploma.

U600: Civilian Education and Training. Includes the conduct of courses intendedprimarily for civilian personnel.

U700: Dependent Education. Includes the conduct of elementary andsecondary school courses of instruction forthe dependents of DoD overseaspersonnel.

U800: Training Development and Support. Training development and support notreported under other codes.

U999: Other Training. This code shall only be used for unusualcircumstances and shall not be used toreport organizations or work that can beaccommodated under a specificallydefined code.

U000A: Management. Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).

U000B: Management Support. Includes non-supervisory managementsupport personnel for the above codedfunctions.

U000C: ADP&E Support. Includes ADP&E support personnel for theabove coded functions.

U000D: Administrative Support. Includes administrative, secretarial and


J-33

CODE DEFINITIONoffice support personnel for the abovecoded functions.

AUTOMATIC DATA PROCESSING

CODE DEFINITIONW824: Data Processing Services.

W824A: Operation of ADP Equipment.W824B: Production Control and CustomerService.W824C: ADP Magnetic Media Library.W824D: Data Transcription/Data EntryServices.W824E: Transmission and TeleprocessingEquipment Services.W824F: Acceptance Testing and RecoverySystems.W824G: Punch Card Processing Services.W824H: Other ADP Operations andSupport.

Includes commercial activities that provideADP processing services by usingGovernment-owned or -leased ADPequipment; participate in a Government-wide ADP sharing program; or procuretime-sharing processing services (machinetime) from commercial sources. Includesall types of data processing servicesperformed by general-purpose ADP andperipheral equipment.

W825: Maintenance of ADP Equipment. Includes commercial activities thatmaintain and repair all Government-ownedADP equipment and peripheral equipment.

W826: Systems Design, Development,and Programming Services.

W826A: Development and Maintenance ofApplications Software.W826B: Development and Maintenance of

Includes commercial activities that providesoftware services associated withnontactical ADP operation.


J-34

CODE DEFINITIONSystems Software.W827: Software Services for TacticalComputers and Automated TestEquipment.

Includes commercial activities that providesoftware services associated with tacticalcomputers and TMDE and ATE hardware.

W999: Other Automatic Data Processing. This code shall only be used for unusualcircumstances and shall not be used toreport organizations or work that can beaccommodated under a specificallydefined code.

W000A: Management. Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).

W000B: Management Support. Includes non-supervisory managementsupport personnel for the above codedfunctions.

W000D: Administrative Support. Includes administrative, secretarial andoffice support personnel for the abovecoded functions.

PRODUCTS MANUFACTURED AND FABRICATED IN-HOUSE

Definition: Commercial activities that manufacture and/or fabricate products in-houseare grouped according to the products predominantly handled as follows:

CODE DEFINITIONX931: Ordnance Equipment. Ammunition and related products.X932 Products Made from Fabric orSimilar Materials.

Includes the assembly and manufacture ofclothing, accessories, and canvasproducts.

X933: Container Products and RelatedItems.

The design, engineering, and manufactureof wooden boxes, crates, and othercontainers; includes the fabrication offiberboard boxes and the assembly ofpaperboard boxes with metal straps.Excludes on-line fabrication of boxes andcrates reported in functional area T801.

X934: Food and Bakery Products. The operation of central meat processingplants, pastry kitchens, bakery, and relatedfacilities. Excludes food services reported


J-35

CODE DEFINITIONin functional areas S713 and H105.

X935: Liquid, Gaseous, and ChemicalProducts.

The provision of liquid oxygen, liquidnitrogen, and similar products.

X936: Rope, Cordage, and TwineProducts; Chains and Metal CableProducts.X937: Logging and Lumber Products. Logging and sawmill operations.X938: Communications and ElectronicProducts.X939: Construction Products. The operation of quarries and pits,

including crushing, mixing, and concreteand asphalt batching plants.

X940: Rubber and Plastic Products.X941: Optical and Related Products.X942: Sheet Metal Products.X943: Foundry Products.X944: Machined Parts.X999: Other Products Manufactured andFabricated In-House.


X000A: Management. Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).

X000B: Management Support. Includes non-supervisory managementsupport personnel for the above codedfunctions.

X000C: ADP&E Support. Includes ADP&E support personnel for theabove coded functions.

X000D: Administrative Support. Includes administrative, secretarial andoffice support personnel for the abovecoded functions.

SELECTED FUNCTIONS

CODE DEFINITIONY100: Combat Forces. Functions in operating forces that deploy

to theaters or areas of operations where


J-36

CODE DEFINITIONthere is probable exposure to hostile fire,or that support contingency operations inunits that do not deploy but, due to thenature of their military mission, are subjectto military attack, shall be designatedmilitary combat when the personnel mustbe trained and ready for combat and theuse of deadly force. This includesmanpower in units that will be engaged in,or provide direct support for militaryoperations, or that provide service supportunder combat conditions.

Y120: Operational Planning and Control. Includes functions that develop anddistributes the planning of operationsunder the Joint Operation PlanningSystem procedures or provide commandand control of contingency operationsother than war as well as wartimeoperation plans.

Y130: Intelligence. Includes functions that perform, direct orcontrol collection, interpretation anddissemination of intelligence/counter-intelligence to the combat, combat supportand combat service support units;commanders and combat planners.

Y200: Commanders and Support Staff: Includes functions which have changingdirection everyday such that a personalservice type contract would be required toperform the function. This function includeorderly room, safety, administrativesupport, and part of public affairs notcovered in other functional areas.

Y300: Embassy Activities: Includes functions that perform work inU.S. Embassies.

Y400: Legal Services: Includes functions that advisecommanders, staffs and individuals onmilitary justice, disciplinary actions, andadverse administrative law matters.Provide legal assistance related to militaryreadiness such as wills. Protect resources


J-37

CODE DEFINITIONand decision-making prerogatives. (Note:Court Reporting is code T820I)

Y410: Criminal Investigation: Includes functions that conduct criminalinvestigations.

Y420: Judicial: Includes functions that directly prosecute,defend, and judge DoD personnel orrepresent DoD within the court system orat public hearings. This includespersonnel responsible for Article 36hearings. (Note: Court Reporting is codeT820I)

Y430: Administrative Hearings: Includes those who are appointed on afull- time basis to hold administrativehearings to determine the eligibility of anyperson for a security clearance, orinvolving actions that affect matters ofpersonal reputation or eligibility toparticipate in Government programs.

Y440: Federal Licensing and Permitting: Includes functions that certify personnel,equipment and organizations with licensesor permits. Does include certification suchthing as Federal Aviation Agency’s Classthree aviation systems equipment such asinstrument landing systems, and doTerminal Area Planning. Does not includethose who issue vehicle or supportequipment operating licenses

Y510: Budget and Financial ProgramManagement:

Includes functions that are responsible forbudget formulation and execution as wellas functions responsible to advisecommanders, directors and staffs onbudgets, obligations and disbursements.Also includes functions that obligate,disburse, collect and control public fundson behalf of the DoD.

Y520: Public Works and Real PropertyMaintenance Program Management:

Includes functions that are responsible forassignment of real property, obtaininglease space and disposal of real property,as well as management of public works.

Y530: Personnel, Community Activities Includes functions that are responsible for


J-38

CODE DEFINITIONand Manpower Program Management: personnel issues such things as military

and civilian personnel recruitment,determining which personnel are fullyqualified for Government employment,equal opportunity and treatment programs,personnel management program and laborrelations. Also includes functions that areresponsible for organization structure,manpower requirements and manpowerresource management programs.

Y540: Maintenance and LogisticsProgram Management:

Includes functions which have specificresponsibility for policy implementationand execution of maintenance or logisticprograms.

Y550: Information andTelecommunications ProgramManagement:

Includes functions which have specificresponsibility for policy implementationand execution of Information orTelecommunications Programs.

Y600: Contracting: Includes functions that are directlyinvolved in the decision making incontracting for needed equipment,supplies and services not covered undersystems and equipment management.

Y650: Acquisition (Equipment andWeapons Systems):

Include functions that are responsible foracquiring new or major modifications toequipment and systems, inventory controlpoint program, and equipmentmanagement program.

Y999: Other Functions: Includes those activities not covered in anyother section of the inventory. This codeshall only be used for unusualcircumstances and shall not be used toreport organizations or work that can beaccommodated under any otherspecifically defined code.

Y000A: Management: Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).

Y000B: Management Support: Includes non-supervisory management


J-39

CODE DEFINITIONsupport personnel for the above codedfunctions.

Y000C: ADP&E Support: Includes ADP&E support personnel for theabove coded functions.

Y000D: Administrative Support: Includes administrative, secretarial andoffice support personnel for the abovecoded functions.

MAINTENANCE, REPAIR, ALTERATION, AND MINOR CONSTRUCTION OF REALPROPERTY.

CODE DEFINITIONZ991: Buildings and Structures—FamilyHousing.

Z991A: Rehabilitation--Tenant Change.Z991B: Roofing.Z991C: Glazing.Z991D: Tiling.Z991E: Exterior Painting.Z991F: Interior Painting.Z991G: Flooring.Z991H: Screens, Blinds, etc.Z9911: Appliance Repair.Z991J: Electrical Repair. Includeselevators, escalators, and moving walks.Z991K: Plumbing.Z991L: Heating Maintenance.

Includes commercial activities that areengaged in exterior and interior paintingand glazing; roofing; interior plumbing;interior electric; interior heating equipment,including heat sources under 750,000 BTUcapacity; installed food service and relatedequipment; air conditioning andrefrigeration with less than a 5-toncapacity; elevators; and other equipmentaffixed as part of the building and notincluded in other activities. Includesfencing, flagpoles, and othermiscellaneous structures associated withfamily housing.


J-40

CODE DEFINITIONZ991M: Air Conditioning Maintenance.Z991N: Emergency/Service Work.Z991T: Other Work.Z992: Buildings and Structures—OtherThan Family Housing.

Z992A: Rehabilitation--Tenant Change.Z992B: Roofing.Z992C: Glazing.Z992D: Tiling.Z992E: Exterior Painting.Z992F: Interior Painting.Z992G: Flooring.Z992H: Screens, Blinds, etc.Z9921: Appliance Repair.Z992J: Electrical Repair. Includeselevators, escalators, and moving walks.Z992K: Plumbing.Z992L: Heating Maintenance.Z992M: Air Conditioning Maintenance.Z992N: Emergency/Service Work.Z992T: Other Work.

Includes commercial activities that areengaged in exterior and interior paintingand glazing; roofing, interior plumbing;interior electric; interior heating equipment,including heat sources with less than750,000 BTU capacity; installed foodservice and related equipment; airconditioning and refrigeration with lessthan a 5-ton capacity; elevators; and otherequipment affixed as part of the buildingand not reported under other functionalcodes. Includes fencing, flagpoles, guardand watchtowers, grease racks,unattached loading ramps, trainingfacilities other than buildings, monuments,grandstands and bleachers, elevatedgarbage racks, and other miscellaneousstructures.

Z993: Grounds and Surfaced Areas. Commercial activities that maintain, repair,and alter grounds and surfaced areas


J-41

CODE DEFINITION

Z993A: Grounds (Improved).

Z993B: Grounds (Other than Improved).

Z993C: Surfaced Areas.

defined in codes Z993A, Z993B, andZ993C, below

Includes improved grounds, includinglawns, drill fields, parade grounds, athletic-and recreational facilities, cemeteries,other ground areas, landscape andwindbreak plants, and accessory drainagesystems.

Small arms ranges, antenna fields, dropzones, and firebreaks. Also grounds suchas wildlife conservation areas,maneuver areas, artillery ranges, safetyand security zones, desert, swamps, andsimilar areas.

Includes airfield pavement, roads, walks,parking and open storage areas, trafficsigns and markings, storm sewers,culverts, ditches, and bridges. Includessweeping and snow removal from streetsand airfields.

Z997: Railroad Facilities. Includes commercial activities thatmaintain, repair, and alter narrow andstandard gauge two-rail tracks, includingspurs, sidings, yard, turnouts, frogs,switches, ties, ballast, and roadbeds—withaccessories and appurtenances, drainagefacilities, and trestles .

Z998: Waterways and WaterfrontFacilities.

Includes commercial activities thatmaintain, repair, and alter approaches,turning basins, berth areas andmaintenance dredging, wharves, piers,docks, ferry racks, transfer bridges, quays,bulkheads, marine railway dolphins,mooring, buoys, seawalls, breakwaters,causeways, jetties, revetments, and similarstructures. Excludes waterwaysmaintained by the Army Corps of


J-42

CODE DEFINITIONEngineers river and harbor programs.Also excludes buildings, grounds,railroads, and surfaced areas located onwaterfront facilities.

Z999: Other Maintenance, Repair,Alteration, and Minor Construction of RealProperty.


Z000A: Management. Includes authorizations formanagers/supervisors for the above codedfunctions (does not include first linesupervisors).

Z000B: Management Support. Includes non-supervisory managementsupport personnel for the above codedfunctions.

Z000C: ADP&E Support. Includes ADP&E support personnel for theabove coded functions.

Z000D: Administrative Support. Includes administrative, secretarial andoffice support personnel for the abovecoded functions.


K-1

Appendix K--Compelling Reason Codes

These codes are from the 30 September 1998 submission of the InherentlyGovernmental and Commercial Activities Inventory to the Office of the Secretary ofDefense and are subject to change. They are provided for reference only and additionalguidance will be promulgated separately for future inventory reporting.

OPNAVINST 4860.7C

K-1

Date post:	13-Apr-2017
Category:	Documents
Upload:	thomas-f-kaplan-and-associates
View:	43 times
Download:	11 times